THE  MOVEMENT 

FOR  BUDGETARY  REFORM 

IN  THE  STATES 


PUBLICATIONS  OF  THE 
INSTITUTE  FOR  GOVERNMENT  RESEARCH 


STUDIES  IN  ADMINISTRATION 

The  System  of  Financial  Administration  of  Great  Britain 

By  W.  F.  Willoughby,  W.  W.  Willoughby  and  S.  M.  Lindsay 

The  Budget 

By  Rene  Stourm 

T.  Plazinski,  Translator,  W.  F.  McCaleb,  Editor 

The  Canadian  Budgetary  System 
By  R  G.  Villard  and  W.  W.  Willoughby 

The  Problem  of  a  National  Budget 

By  W.  F.  Willoughby 

The  Movement  for  Budgetary  Reform  in  the  States 
By  W.  F.  Willoughby 

Teachers'  Pension  Systems  in  the  United  States 

By  Paul  Studensky  (In  press) 

The   System   of   Financial  Administration  of   the  United 
States  (In  preparation) 

PRINCIPLES  OF  ADMINISTRATION 

Principles  Governing  the  Retirement  of  Public  Employees 

By  Lewis  Meriam 

Principles  of  Government  Purchasing 

By  A.  G.  Thomas  (In  press) 

Principles  of  Public  Employment 

By  A.  W.  Procter  (In  preparation) 

SERVICE  MONOGRAPHS  OF  THE  UNITED  STATES  GOVERN- 
MENT 

The  Reclamation  Service  (In  press) 

The  United  States  Geological  Survey  (In  press) 

The  Bureau  of  Mines  (In  preparation) 

D.  APPLETON  AND  COMPANY 
PUBLISHERS  NEW  YORK 


213  D 


STUDIES   IN  ADMINISTRATION 
INSTITUTE  FOR  GOVERNMENT  RESEARCH 

THE  MOVEMENT 

FOR  BUDGETARY  REFORM 

IN  THE  STATES 

BY 

WILLIAM  FRANKLIN  WILLOUGHBY 

DIRECTOR,  INSTITUTE  FOR  GOVERNMENT  RESEARCH 


D.  APPLETON  AND  COMPANY 

NEW  YORK  LONDON 

1918 


COPYRIGHT,  1918,  BY 
THE  INSTITUTE  FOR  GOVERNMENT  RESEARCH 


Printed  in  the  United  States  of  America 


THE  INSTITUTE  FOR  GOVERNMENT  RESEARCH 

Washington,  D.  C. 


The  Institute  for  Government  Research  is  an  association  of  citi- 
zens for  cooperating  with  public  officials  in  the  scientific  study  of 
government  with  a  view  to  promoting  efficiency  and  economy  in 
its  operations  and  advancing  the  science  of  administration.  It 
aims  to  bring  into  existence  such  information  and  materials  as  will 
aid  in  the  formation  of  public  opinion,  and  will  assist  officials,  par- 
ticularly those  of  the  national  government,  in  their  efforts  to  put  the 
public  administration  upon  a  more  efficient  basis. 

To  this  end,  it  seeks  by  the  thoroughgoing  study  and  examination 
of  the  best  administrative  practice,  public  and  private,  American 
and  foreign,  to  formulate  those  principles  which  lie  at  the  basis  of 
all  sound  administration,  and  to  determine  their  proper  adaptation 
to  the  specific  needs  of  our  public  administration. 

The  accomplishment  of  specific  reforms  the  Institute  recognizes 
to  be  the  task  of  those  who  are  charged  with  the  responsibility  of 
legislation  and  administration;  but  it  seeks  to  assist,  by  scientific 
study  and  research,  in  laying  a  solid  foundation  of  information  and 
experience  upon  which  such  reforms  may  be  successfully  built. 

While  some  of  the  Institute's  studies  find  application  only  in 
the  form  of  practical  cooperation  with  the  administrative  officers 
directly  concerned,  many  are  of  interest  to  other  administrators 
and  of  general  educational  value.  The  results  of  such  studies  the 
Institute  purposes  to  publish  in  such  form  as  will  insure  for  them 
the  widest  possible  utilization. 


Frank  J.  Goodnow, 

Chairman 


Edwin  A.  Alderman 
Robert  S.  Brookings 
James  F.  Curtis 
R.  FultoC  Cutting 
Raymond  B.  Fosdick 
Felix  Frankfurter 


Officers 

Robert  S.  Brookings, 

Vice-Chairman 

Frederick  Strauss, 

Treasurer 


Charles  P.  Neill, 

Secretary 


Trustees 

Frank  J.  Goodnow 
Jerome  D.  Greene 
Arthur  T.  Hadley 
Cesar  Lombardi 
A.  Lawrence  Lowell 
Samuel  Mather 
Charles  P.  Neill 

Director 
W.  F.  Willoughby. 


Charles  D.  Norton 
Martin  A.  Ryerson 
Frederick  Strauss 
Theodore  N.  Vail 
Charles  R.  Van  Hise 
Robert  S.  Woodward 


PREFACE 

In  our  volume  on  The  Problem  of  a  National  Budget,  the 
attempt  was  made  to  do  three  things:  to  present  an  analysis 
of  the  problem  of  a  budget ;  to  trace  the  history  of  the  movement 
for  budgetary  reform  in  the  national  government;  and  to  point 
out  certain  steps  which  it  is  believed  should  be  taken  by  that 
government  with  a  view  to  the  introduction  of  a  budgetary  sys- 
tem as  the  basis  for  the  administration  of  its  financial  affairs. 
The  present  volume  has  for  its  purpose  to  do  a  somewhat  similar 
work  for  the  state  governments.  In  view  of  the  fact  that  the 
problem  of  a  budget  has  been  subjected  to  detailed  analysis  in 
the  volume  relating  to  the  national  government,  it  is  unnecessary 
to  attempt  such  a  work  here.  The  problem  is  substantially  the 
same  in  both  the  national  and  state  governments.  Differences 
exist  only  in  respect  to  the  conditions  to  be  met.  These  differ- 
ences will  be  considered  in  the  introductory  chapter  of  the  present 
volume. 

As  no  statement  of  the  nature  and  functions  of  a  budget  is 
thus  attempted  in  this  volume,  it  is  of  great  importance  that  the 
reader  should  read  the  chapter  bearing  upon  this  subject  con- 
tained in  our  other  volume.  It  is  impossible  intelligently  to  con- 
sider the  progress  made  by  anybody  in  working  out  a  difficult 
problem  until  the  terms  of  that  problem  are  clearly  understood. 
Until  one  knows  what  is  the  problem  of  a  budget,  what  are  its 
elements,  and  what  are  the  several  steps  that  have  to  be  taken  for 
its  solution,  a  reading  of  acts  passed  affords  but  little  information 
regarding  the  progress  which  the  passage  of  such  acts  really 
represents.  With  such  a  knowledge,  one  is  in  a  position  where 
he  can  at  once  determine  whether  the  framers  of  an  act  have  had 
clearly  in  mind  the  nature  of  the  problem  they  were  attempting 
to  meet,  and  the  extent  to  which  their  action  represents  a  real 
advance  in  the  right  direction.  Furthermore,  such  frequent 
reference  has  been  made  in  the  pages  that  follow,  where  the  at- 
tempt is  made  to  evaluate  the  merits  of  the  steps  taken  by  the 

vii 


viii  PREFACE 

several  states  looking  to  the  introduction  of  a  budgetary  system, 
to  the  analysis  of  the  budgetary  problem  as  given  in  the  volume 
on  the  national  budget  that  it  will  be  difficult  for  the  reader  at 
times  to  follow  the  argument  of  the  writer  without  some  knowl* 
edge  of  its  contents. 

On  the  other  hand,  the  present  volume  contains  much  that  will 
be  of  interest  to  persons  who  are  primarily  interested  in  the  budg- 
etary problem  as  it  confronts  the  national  government.  The  two 
volumes,  in  fact,  constitute  companion  volumes  which  can  well 
be  read  in  conjunction  with  each  other. 

W.    F.    WlLLOUGHBY. 

Institute  for  Government  Research, 
Washington,  D.  C. 

July  I,  1918. 


CONTENTS 

CHAPTER  PAGE 

I.    INTRODUCTION:    ORIGIN  OF  MOVEMENT    .        .        .        .  I 

The  Budget  as  an  Instrument  of  Democracy      .        .  I 
The  Budget  as  an  Instrument  for  Correlating  Legis- 
lative and  Executive  Action  ...  2 
The  Budget  as  an  Instrument  for  Securing  Adminis- 
trative Efficiency  and  Economy    .                          .  4 
Use  of  Budget  First  Demanded  as  a  Feature  of  Mu- 
nicipal Reform       ......  5 

Movement  for  Budgetary  Reform  Carried  Over  to 

the  States 8 

Nature  of  the  Problem n 

II.     BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL  STATES       .  16 

Maryland  **T~ 16 

Utah       : 24 

New  Mexico  *si— 28 

III.  BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL  STATES     .  31 

Virginia  -*— 31 

Delaware— % 38 

IV.  BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL  STATES      .  44 

Illinois  rr* 44 

Iowa  — 52 

Kansas  T- 54 

Minnesota  — r 57 

Nebraska  — 61 

New  Jersey  «r-     .        .        .        .     '    .        .        .        .63 

Ohio  *~r- 72 

V.     BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL  STATES      .  82 

California    " 82 

Tennessee  """. 95 

VI.     BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL  STATES      .  103 

Wisconsin- 103 

Vermont  ^  -.- 113 

North  Dakota  — • 121 

South  Dakota  — 124 

VII.    BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL  STATES    .  128 

Connecticut  T'      .        .        .        .        .        .        .        .  128 

Louisiana — r 131 

ix 


CONTENTS 

CHAPTER  PAGE 

Massachusetts  '    7 137 

Oregon  - — 146 

Washington  -T"      . 149 

VIII.     BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL  STATES      .     152 
New  York  T- 152 

IX.     BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL  STATES      .  168 

Alabama  *— - 168 

Arizona "--» 168 

Arkansas  -"^ 170 

Colorado  «— 171 

Florida 172 

Michigan  — 173 

Pennsylvania 173 

X.     COMPARATIVE  ANALYSIS  OF  BUDGETARY  LEGISLATION  OF 

THE  STATES  :  FORMULATION  OF  THE  BUDGET  .        .     175 
Adoption  of  Principle  of  a  Consolidated  Statement  of 

Estimates 175 

Departmental  Estimates  Submitted  with  Recommen- 
dations of  Reviewing  Authority  ....     176 
Formulation  of  Budget  by  a  Legislative  Committee  .     179 
Formulation  of  Budget  by  a  Joint  Legislative-Admin- 
istrative Committee 179 

Formulation  of  Budget  by  an  Administrative  Board  .     181 
Formulation  of  Budget  by  the  Governor   .        .        .182 
Establishment  of  an  Integrated  Administrative  Sys- 
tem           .183 

Establishment  of  Central  Budgetary  and  Administra- 
tive Organs 186 

XI.  COMPARATIVE  ANALYSIS  OF  BUDGETARY  LEGISLATION  OF 
THE  STATES:  LEGISLATIVE  ACTION  UPON  THE 
BUDGET 195 

Distinction  between  a  Budget  and  Revenue  and  Ap- 
propriation Acts  .......  195 

Distinction  between  General  and  Supplemental  Ap- 
propriation Bills 196 

Special  Procedure  for  Enactment  of  Supplemental 

Appropriation  Bills 197 

Right  of  Legislature  to  Modify  Budgetary  Proposals     199 

Provision  for  the  Allotment  or  Transfer  of  Appro- 
priations   201 

Right  of  Governor  and  Departmental  Heads  to  be 

Heard  by  Legislature  on  Budgetary  Proposals  .  205 

XII.     CONCLUSION:  GENERAL  SUMMARY 207 

APPENDIX 

i.     EXTRACTS  FROM  REPORT  OF  COMMITTEE  ON  FINANCES, 
REVENUES  AND  EXPENDITURES,  NEW  YORK  CONSTITU- 


CONTENTS 

APPENDIX  PAGE 

TIONAL  CONVENTION,  1915,  FAVORING  ADOPTION  OF 
CONSTITUTIONAL  AMENDMENT  PROVIDING  FOR  A  BUDG- 
ET SETTING  FORTH  DEFECTS  OF  EXISTING  APPROPRI- 
ATION SYSTEM  IN  NEW  YORK  STATE  .  .  .  .211 
2.  SUMMARY  OF  FINDINGS  AND  RECOMMENDATIONS  RELAT- 
ING TO  STATE  FINANCES  AND  BUDGET  PROCEDURE  AS 
SUBMITTED  TO  THE  SURVEY  COMMITTEE  OF  STATE 
AFFAIRS,  COLORADO,  BY  ITS  STAFF,  DECEMBER,  1916  .  218 

3.    BIBLIOGRAPHY 223 

INDEX 249 


THE   MOVEMENT  FOR   BUDGETARY 
REFORM   IN  THE   STATES 

CHAPTER  I 
INTRODUCTION:    ORIGIN    OF   MOVEMENT 

Of  few  movements  for  political  reform  is  it  feasible  to 
determine  precisely  the  causes  to  which  it  owes  its  rise  or  to 
fix  exactly  the  date  of  its  origin.  If  one  seeks  for  an  explana- 
tion of  the  modern  movement,  now  under  full  way,  for  the 
adoption  by  the  several  governing  bodies  of  the  United  States 
of  a  budget  as  the  central  and  controlling  feature  of  their 
systems  of  financial  administration,  it  must  be  found  in  a  num- 
ber of  more  or  less  distinct  movements  which  have  each  found 
in  this  device  an  important  means  for  achieving  or  promoting 
the  object  sought. 

The  Budget  as  an  Instrument  of  Democracy.  Among 
these  first  place  must  be  given  to  that  effort  continuously  being 
put  forth  to  devise  means  by  which  popular  government,  in 
the  sense  that  the  affairs  of  government  shall  be  conducted  in 
conformity  with  the  popular  will,  may  become  a  reality  in  fact 
as  in  name.  It  is  hardly  necessary  to  point  out  that  the  pop- 
ular will  cannot  be  intelligently  formulated  nor  expressed 
unless  the  public  has  adequate  means  for  knowing  currently 
how  governmental  affairs  have  been  conducted  in  the  past, 
what  are  present  conditions  and  what  program  for  work  in 
the  future  is  under  consideration.  Of  all  means  devised  for 
meeting  this  requirement  no  single  one  approaches  in  com- 
pleteness and  effectiveness  a  budget  if  properly  prepared.  It 
at  once  serves  to  make  known  past  operations,  present  condi- 

I 


BtY&GETARY  REFORM  IN  THE  STATES 

tions  arid  fMture  proposals,  definitely  locates  responsibility  and 
furnishes  the  means  for  control.  Professor  A.  R.  Hatton  is 
thus  justified  when  he  says : 

Above  and  beyond  its  relation  to  economy  and  efficiency  in 
public  affairs  it  (the  budget)  may  be  made  one  of  the  most 
potent  instruments  of  democracy.  Given  at  least  manhood 
suffrage,  any  government  so  organized  as  to  produce  and  carry 
out  a  scientific  budget  system  will  be  susceptible  of  extensive 
and  intelligent  popular  control.  On  the  contrary  those  gov- 
ernments, whatever  their  other  virtues,  which  fail  to  provide 
adequate  budget  methods  will  neither  reach  the  maximum  of 
efficiency  nor  prove  to  be  altogether  responsible  to  the  people. 

A  new  spirit  in  American  politics  is  manifesting  itself  in  the 
powerful  movement  for  the  reform  of  governmental  organiza- 
tion and  procedure  in  the  interest  of  popular  control  and  effi- 
ciency. There  are  naturally  many  features  in  the  program  for 
the  accomplishment  of  this  twofold  object.  No  single  change 
would  add  so  largely  to  both  democracy  and  efficiency  as  the 
introduction  of  proper  budget  methods.1 

The  Budget  as  an  Instrument  for  Correlating  Legislative 
and  Executive  Action.  Closely  associated  with  this  demand 
that  more  effective  means  be  provided  by  which  the  popular 
will  and  the  principle  of  popular  control  may  be  made  effective 
is  the  feeling  that  the  present  working  conditions  of  our  legis- 
lative bodies  and  particularly  their  relations  to  the  executive 
branch  of  government  are  far  from  satisfactory.  The  convic- 
tion has  been  growing  that  a  mistake  has  been  made  in  seeking 
to  make  of  our  legislatures  boards  of  directors  to  concern 
themselves  with  the  details  of  the  activities,  organization  and 
methods  of  business  of  administrative  services;  that  the  true 
function  of  the  legislature  should  be  that  of  acting  as  an  organ 
of  public  opinion  in  the  larger  sense  and  as  the  medium 
through  which  those  concerned  with  the  actual  administration 
of  affairs  should  be  supervised,  controlled  and  held  to  a  rigid 

1  Foreword  to  Public  Budgets,  Annals  of  the  American  Academy 
of  Political  and  Social  Science,  November,  1915. 

2 


ORIGIN  OF  MOVEMENT 

accountability  for  the  manner  in  which  they  discharge  their 
duties.  • 

This  has  led  inevitably  to  the  position  that  upon  the  exec-  +*• . 
utive  should  be  placed  the  responsibility  for  the  formulation 
of  work  programs  and  the  decision,  in  the  first  instance  at 
least,  of  the  means  to  be  employed  in  the  putting  of  these  pro- 
grams into  execution.  This  would  appear  to  carry  with  it  a 
great  strengthening  of  the  executive  at  the  expense  of  the 
legislative  branch  of  government.  So  it  does  in  one  sense.  It 
is  a  canon  of  administrative  science,  however,  that  when  dis- 
cretionary powers  and  authority  are  increased  a  corresponding 
increase  should  be  made  in  the  means  of  controlling  and 
supervising  the  manner  in  which  these  augmented  powers  are 
exercised.  If  legislatures  are  to  surrender  to  the  executive 
increased  powers  in  respect  to  the  conduct  of  administrative 
affairs  they  must  strengthen  the  means  by  which  they  may 
assure  themselves  that  these  powers  are  properly  exercised. 
There  are  two  methods  by  which  superior  direction,  super- 
vision and  control  may  be  exerted,  by  specification  in  advance, 
or,  by  the  establishment  of  a  proper  accounting  and  reporting 
system,  by  establishing  means  through  which  full  information 
may  be  currently  available  regarding  the  manner  in  which 
delegated  authority  is  being  exercised.  Legislatures  are  being 
asked  to  give  up  the  first  method  of  control.  If  they  do  so  it 
is  imperative  that  the  conditions  stated  in  the  second  alter- 
native should  be  met. 

It  is  at  this  point  that  the  demand  for  the  adoption  of  a 
budget  finds  its  place  as  an  integral  part  of  the  movement  for 
the  improvement  of  the  working  relations  between  the  two 
branches  of  government.    In  the  budget  is  to  be  found  far  the"^ 
most  effective  means  that  has  as  yet  been  devised  whereby 
larger  responsibility  for  the  formulation  and  execution  of 
financial  and  work  programs  may  be  conferred  upon  the  exec- 
utive and  yet  the  latter  be  held  to  a  more  rigid  accountability/ 
for  the  manner  in  which  this  responsibility  is  discharged.    In 
a  very  true  sense,  therefore,  the  movement  for  the  adoption  of 

3 


BUDGETARY  REFORM  IN  THE  STATES 

budgetary  systems  by  our  governing  bodies  is  an  integral  and 
essential  part  of  the  whole  greater  movement  for  the  accom- 
plishment of  governmental  reforms  generally. 

The  Budget  as  an  Instrument  for  Securing  Administra- 
tive Efficiency  and  Economy.    Still  another  movement  which 
has  logically  resulted  in  the  demand  for  budgetary  reforms  is 
that  for  placing  the  purely  technical  methods  of  governmental 
organization  and  administration  upon  a  more  efficient  and 
economical  basis.    The  question  has  been  raised  as  to  whether 
"*  there  are  any  inherent  reasons  why  government  officers  should 
not  be  held  to  the  same  standards  of  efficiency  and  honesty  as 
are  demanded  in  the  business  world.    The  demand  that  they 
should  be  has  become  more  insistent  as  the  tasks  imposed  upon 
governments  have  become  more  numerous  and  complex  and, 
in  many  cases,  more  nearly  similar  to  the  character  of  the 
tasks  which  private  corporations  are  called  upon  to  perform. 
In  the  business  world  it  is  recognized  that  no  undertaking  of 
magnitude,  certainly  none  performed  under  a  corporate  form 
of  organization,  can  be  efficiently  administered  which  does 
not  have  a  system  of  accounts  and  reports  that  will  permit 
the  directing  body,  the  board  of  directors,   and  the  stock- 
holders, to  secure  a  clear  picture  of  past  operations,  present 
^conditions  arid  future  programs  of  activities.    In  all  proposals 
looking  toHhe  reform  of  methods  of  business  of  governmental 
bodies,  chief  attention  has  consequently  been  placed  upon  the 
demand  for  the  improvement  of  the  methods  by  which  their 
financial  affairs  are  conducted.     It  is  inconsistent  to  the  last 
degree  that  governments  should  insist  that  corporations  con- 
trolled by  them  should  have  systems  of  accounting  and  report- 
ing corresponding  to  the  most  approved  principles  of  modern 
accountancy  while  not  providing  for  equally  efficient  systems 
for  the  management   of   their  own  financial  affairs.     The 
demand  for  improved  methods  of  public  administration  has 
thus  inevitably  centered  primarily  upon  the  demand  for  im- 
proved methods  of  financial  administration  and,  in  order  that 
this  may  be  secured,  upon  the  specific  demand  for  the  adoption 

4 


ORIGIN  OF  MOVEMENT 

of  a  budgetary  system  as  the  central  feature  of  such  improved 
system. 

Use  of  Budget  First  Demanded  as  a  Feature  of  Munici- 
pal Reform.  Turning  now  to  a  history  of  the  movement  itself 
the  point  of  departure  must  be  found  in  the  great  movement 
which  has  been  so  much  in  evidence  during  the  present  gen- 
eration, for  the  improvement  of  methods  of  municipal  admin^/y 
istration.  After  repeated  disappointments  persons  interested^ 
in  municipal  reform  came  to  an  appreciation  that  permanent 
reform  was  not  to  be  accomplished  by  the  putting  in  the  field 
of  citizens  tickets  and  the  ousting  of  officials  who  subordinated 
the  public  good  to  private  gain.  More  and  more  it  was  borne 
in  upon  them  that  if  lasting  improvements  were  to  be  effected, 
the  system  of  municipal  government  itself  and  methods  of  I 
administration  had  to  be  changed,  that  there  must  be  estab- 
lished principles  of  administration  and  means  of  direction, 
supervision  and  control  that  would  automatically,  as  it  were, 
result  in  better  administration  or  at  least  make  it  possible  for 
all  interested  parties  to  determine,  without  the  necessity  for 
special  investigations,  Whether  affairs  were  being  efficiently 
and  economically  administered  or  the  reverse.  It  was  found, 
in  a  word,  that  the  problem  had  to  be  attacked  from  the  tech- 
nical as  well  as  the  moral  standpoint. 

This  change  in  the  method  of  approach  found  expression 
not  only  in  the  altered  character  of  the  work  attempted  by 
such  organizations  as  the  National  Municipal  League,  but  in 
the  appreciation  that  a  thorough  study  of  the  technical  prob- 
lems of  municipal  administration  with  a  view  to  the  formula- 
tion of  concrete  measures  of  reform  could  only  be  successfully 
undertaken  by  permanent  organization  specially  established 
and  with  a  technically  competent  staff  to  undertake  this  work. 
Appreciation  of  this  led  to  the  creation  by  public  spirited  in- 
dividuals of  the  large  number  of  bureaus  of  municipal  re- 
search  which  have  contributed  so  powerfully  during  recent 
years  to  the  improvement  of  methods  of  municipal  adminis- 
tration in  the  United  States.  This  is  not  the  place  to  attempt 

5 


BUDGETARY  REFORM  IN  THE  STATES 

any  general  characterization  of  the  work  of  these  bodies.  It 
is  only  necessary  for  us  to  say  that  these  bureaus  have  almost 
without  exception  concentrated  a  large  part  of  their  attention 
upon  problems  of  financial  administration  and  that  all,  likewise 
without  exception,  have  bent  their  energies  towards  the  secur- 
ing by  the  cities  with  whose  operations  they  concerned  them- 
selves of  a  budgetary  system.  This  action  was  in  large 
measure  predicated  upon  the  proposition  that  a  municipality 
partakes  in  large  measure  of  the  characteristics  of  an  ordinary 
business  corporation  and  should  be  operated  as  such.  This 
has  meant  that  there  should  be  employed  by  it  the  methods 
and  agencies  which  have  been  found  indispensable  to  the  ef- 
ficient operation  of  large  business  corporations.  This  view 
accepted,  the  demand  at  once  arose  that  the  expenditures  of 
the  city  should  be  brought  into  direct  relation  to  its  possible 
or  actual  revenues  and  be  based  upon  estimates  and  recom- 
mendations emanating  from  the  spending  departments.  The 
advantage  was  at  once  seen  of  having  the  estimates  and 
recommendations  thus  made  by  the  several  administrative 
services  submitted  to  some  central  executive  organ  vested  with 
authority  to  revise  and  reduce  them  when  necessary  and  to 
bring  them  into  due  relation  and  proportion  to  one  another. 
This  was  seen  to  be  essential  since  spending  departments  are 
concerned  primarily  each  in  its  own  activities  and  are,  there- 
fore, interested  in  getting  the  largest  possible  allotment  of 
funds  from  the  general  treasury.  If  the  latter  is  to  be  pro- 
tected and  the  relative  as  well  as  the  absolute  utility  of  dif- 
ferent classes  of  work  is  to  be  determined  some  organ  must 
exist  within  the  administration  which  is  not  itself  a  spending 
department  but  has  the  special  function  of  balancing  demands 
of  spending  departments  and  of  protecting  the  general  treasury 
from  the  demands  being  made  upon  it  beyond  its  resources. 
This  fundamental  feature  was  appreciated  by  municipal 
reformers  prior  to  the  establishment  of  bureaus  of  municipal 
research.  Thus  the  National  Municipal  League  as  early  as 


ORIGIN  OF  MOVEMENT 

1899  included  in  its  draft  of  a  model  municipal  corporation  act 
a  section  providing  that : 

It  shall  be  the  duty  of  the  Mayor  from  time  to  time  to  make 
such  recommendations  to  the  Council  as  he  may  deem  to  be 

for  the  welfare  of  the  city  and  on  the day  of in 

each  year  to  submit  to  the  Council  the  annual  budget  of  cur- 
rent expenses  of  the  city,  any  item  in  which  may  be  reduced  or 
omitted  by  the  Council ;  but  the  Council  shall  not  increase  any 
item  in  nor  the  total  of  said  budget. 

The  course  of  budgetary  reform  in  municipalities  was  also 
materially  promoted  by  the  Bureau  of  the  Census  through 
the  continuous  pressure  which  it  exerted  upon  municipalities 
to  improve  their  methods  of  accounting  and  reporting  and 
especially  through  the  standard  classification  of  municipal 
expenditures  which  it  worked  out  in  connection  with  experts 
representing  the  accounting  profession  and  the  National  Mu-  •*/ 
nicipal  League.  In  later  years  the  development  of  the  commis-  . 
sion  and  city  manager  types  of  municipal  government,  and  the 
policy  adopted  by  a  number  of  the  leading  cities  in  their  recent 
charter  revisions  to  provide  for  boards  of  estimates  among 
whose  functions  the  most  important  duty  was  that  of  passing 
upon  and  revising  estimates  as  originally  framed  by  the  spend- 
ing departments,  have  likewise  contributed  powerfully  to  the 
promotion  of  budgetary  reform.  These  all  represent  the 
definite  adoption  of  the  most  fundamental  principle  of  a 
budget  that  there  should  be  a  central  budget  framing  organ 
to  stand  between  the  estimating  departments  and  the  fund- 
granting  authority.  In  few,  if  any,  cases,  however,  has  the 
principle  been  adopted  of  vesting  final  authority  in  respect 
to  the  framing  of  a  budget  in  the  chief  executive  officer. 

After  all  is  said,  however,  to  the  bureaus  of  municipal  re- 
search and  allied  organizations  established  by  boards  of  trade 
and  other  citizen  agencies  belongs  the  chief  credit  for  the 
persistent  demand  that  a  budget  be  made  the  foundation  stone 
of  the  system  of  financial  administration  of  all  municipalities. 

7 


BUDGETARY  REFORM  IN  THE  STATES 

Not  only  have  they  urged  this  without  ceasing  but  they  have 
done  a  large  amount  of  work  in  the  way  of  working  out  and 
installing  systems  of  financial  administration  in  various  cities 
resting  on  this  basis. 

Movement  for  Budgetary  Reform  Carried  Over  to  the 
States.  It  was  inevitable  that  the  movement  for  budgetary 
reform  in  municipalities,  once  fairly  under  way,  should  be 
carried  x>ver  to  efforts  looking  to  the  improvement  of  state 
governments.  Every  reason  dictating  the  necessity  for  this 
reform  in  the  case  of  municipalities  existed  with  increased 
force  in  the  case  of  these  governments.  Here  the  conditions 
to  be  met,  however,  were  much  more  difficult  than  those  ob- 
taining in  the  case  of  municipal  governments.  Broadly  speak- 
ing, the  administrative  branch  of  municipal  governments  cor- 
responds to  the  integrated  type  of  organization,  with  the  mayor 
at  the  head  as  administrator  in  chief.  It  has  been  pointed 
out  in  our  consideration  of  the  nature  and  functions  of  a 
budget 1  how  essential  is  this  form  of  organization  to  the 
proper  operation  of  a  budgetary  system.  It  is  unfortunate, 
both  from  the  standpoint  of  budgetary  reform  and  that  of  good 
administration  generally,  that  this  condition  obtains  in  but 
few,  if  any,  of  the  states.  As  is  well  known,  in  most  if  not 
all  of  the  states  the  administrative  branch  consists  of  a  large 
number  of  practically  independent  services.  Only  in  small 
degree  has  the  governor  any  positive  powers  of  direction  or 
any  adequate  power  to  control.  The  line  of  authority  runs 
direct  in  each  case  to  the  legislature ;  and  the  authority  of  this 
body  is  often  limited  by  the  fact  that  the  heads  of  these  services 
owe  their  election  to  office,  not  to  it,  but  to  the  people.  It  re- 
sults from  this  that  in  the  case  of  most,  if  not  all,  of  the  states 
the  problem  of  the  introduction  of  a  thoroughly  efficient 
budgetary  system  involves  that  of  fundamentally  recasting 
their  systems  of  government. 

As  regards  the  methods  actually  in  force  for  the  deter- 
mining and  making  provision  for  the  financial  needs  of  the 

1  The  Problem  of  a  National  Budget,  p.  1-29. 

8 


ORIGIN  OF  MOVEMENT 

government,  conditions  in  the  states  were  also  extremely  un- 
satisfactory. 

Writing  no  later  than  1916  a  leading  student  of  our  state 
governments  thus  characterized  the  practices  then  prevailing 
in  the  appropriation  of  funds :  1 

Each  department  of  administration  ordinarily  reports 
directly  to  the  legislature  upon  the  expenditure  of  its  appro- 
priation, and  transmits  in  the  same  manner  its  estimates  of  the 
appropriations  necessary  and  proper  for  the  ensuing  year,  or, 
in  the  case  of  states  where  the  legislature  meets  biennially,  two 
years.  Ordinarily  neither  the  governor  nor  any  other  execu- 
tive officer  has  anything  to  do  with  any  departmental  estimates 
save  his  own.  *  *  * 

The  legislatures  refer  the  departmental  reports  and  esti- 
mates to  standing  committees.  The  practice  differs  in  dif- 
ferent states.  In  some  there  are  several  committees  with 
jurisdiction  over  different  classes  of  appropriations.  In 
others  all  appropriation  bills  must  be  referred  to  a  single  com- 
mittee. In  some  states  there  are  separate  appropriations  com- 
mittees in  each  house.  In  others  there  is  a  single  joint 
committee.  In  some  states  bills  that  carry  appropriations,  not 
required  to  cover  departmental  estimates,  may  be  reported  by 
various  committees,  without  consultation  either  with  the 
departments  concerned  or  with  the  appropriation  committee. 
In  most  states  such  bills  must  be  referred  before  final  action 
by  the  house  to  the  appropriation  committee.  Thus  there  is 
some  centralized  control  over  the  appropriation  bills  in  most 
legislatures.  But  the  department  heads  must  appear  before 
the  appropriation  committee  and  demonstrate  the  necessity  and 
propriety  of  the  appropriations  for  which  they  have  asked. 
They  appear  independently,  each  working  solely  for  his  own 
department,  and  responsible  in  no  way  for  other  departments 
or  for  the  size  of  the  state  appropriations  as  a  whole.  Since 
every  active  department  head  normally  wants  to  expand  the 
services  of  his  own  department  and  is  likely  to  overrate  its 
importance  as  compared  with  others,  departmental  estimates 
tend  to  increase  year  by  year,  without  much  regard  to  the 
general  growth  of  public  expenditures  and  revenues.  Thus 
the  legislature  is  confronted  with  the  difficult  task  of  reducing 

1  Holcombe,  State  Government  in  the  United  States,  p.  332  ff. 

9 


BUDGETARY  REFORM  IN  THE  STATES 

the  estimates  in  order  to  keep  the  total  appropriations  within 
reasonable  compass.  This  task  is  made  more  difficult  by  the 
number  and  magnitude  of  the  special  and  local  appropriations 
which  many  districts  want  their  representatives  to  procure  for 
them  in  addition  to  the  appropriations  for  regular  depart- 
mental work. 

This  system  inevitably  breeds  extravagance  and  inefficiency. 
The  departmental  reports  ordinarily  present  no  clear  picture 
of  the  fiscal  operations  of  the  state  as  a  whole,  the  estimates 
of  the  various  department  heads  are  likely  to  be  excessive, 
and  their  recommendations  unrelated  to  one  another  or  to  any 
coordinated  administrative  policy.  The  officer,  if  any,  who 
collects  the  estimates  and  transmits  them  to  the  legislature  has 
no  control  over  them,  the  department  heads  themselves  have 
no  constitutional  right  to  defend  their  estimates,  and  in  prac- 
tice the  legislature  may  disregard  them.  The  result  tends  to 
be  perfunctory  work  on  the  part  of  the  state  fiscal  officers. 
Intelligent  planning  for  the  future  by  the  administration  is 
almost  impossible.  Even  the  balance  of  current  appropria- 
tions and  revenues  is  made  difficult. 

The  states  have  sought  to  correct  these  evils  by  constitu- 
tional limitations  upon  the  power  to  contract  debts,  but  such 
remedies  are  unsatisfactory.  They  do  not  necessarily  curb 
extravagance  and  waste.  They  may  merely  operate  to  curtail 
important  activities  of  the  state  administration,  whilst  money 
is  squandered  upon  objects  in  which  the  legislature  may  be 
more  directly  interested.  Under  such  circumstances  the 
departments  with  the  most  political  influence  are  likely  to 
receive  the  most  favorable  treatment  at  the  hands  of  the  legis- 
latures. If  that  influence  is  created  by  the  use  of  depart- 
mental funds  in  accordance  with  the  desires  of  influential  mem- 
bers of  the  legislature  or  party  leaders,  politics  and  adminis- 
tration become  confused  to  the  detriment  of  the  public 
interest.  *  *  * 

A  tendency  has  recently  appeared  in  various  states  to 
strengthen  executive  control  of  appropriations  by  introducing 
the  principle  of  the  budget.  A  budget  is  a  set  of  estimates 
for  all  administrative  departments,  prepared,  upon  the  basis 
of  the  reports  of  the  department  heads,  by  a  single  executive 
officer  or  board.  *  *  *  In  most  of  the  states  the  tradi- 
tional system  of  appropriations  remains  in  full  force.  Under 
this  system  the  control  of  appropriations  in  the  first  instance 

10 


ORIGIN  OF  MOVEMENT 

rests  with  the  legislative  leaders,  above  all  with  the  chairman 
and  members  of  the  committee  on  ways  and  means  or  appro- 
priations. Through  their  control  over  appropriations  they 
exercise  more  real  influence  upon  the  actual  conduct  of  state 
administration  than  the  governor  himself.  They,  rather  than 
he,  are  the  actual  heads  of  the  state  administration.  In  other 
words,  if  the  governor  may  be  said  to  be  the  chief  legislator 
of  the  state,  the  house  chairman  of  ways  and  means  may  be 
regarded  as  the  chief  administrator. 

Notwithstanding  the  magnitude  of  the  undertaking,  involv- 
ing as  it  does  the  recasting  of  the  political  systems  of  the 
states  in  respect  to  the  distribution  of  powers,  the  reorganiza- 
tion of  the  administrative  branch  of  government,  and  the 
radical  reform  of  methods  of  estimating  and  making  provision 
for  the  financial  needs  of  the  government,  it  is  one  upon  which 
the  states  have  vigorously  entered.  Though  inaugurated  later 
than  the  corresponding  movement  for  budgetary  reform  on  the 
part  of  municipalities,  it  is  now  progressing  at  a  far  greater 
rate.  So  widespread  is  it,  and  so  important  are  the  steps  that 
have  already  been  taken  that  one  is  fully  justified  in  stating 
that  a  general  movement  for  the  accomplishment  of  this  re- 
form exists  throughout  the  United  States. 

In  the  pages  that  follow  the  attempt  is  made  to  trace  in 
broad  outlines  the  progress  of  this  movement.  It  is  highly 
desirable  that  we  should  do  so  since,  though  the  problem  is 
one  that  has  to  be  worked  out  for  each  government  separate- 
ly, the  principles  underlying  the  action  to  be  taken  are  in  all 
cases  the  same,  and  the  progress  made  by  one  government 
furnishes  a  basis  of  experience  that  may  be  availed  of  by  all. 
Each  step  made,  moreover,  strengthens  the  demand  for  cor- 
responding action  on  the  part  of  other  bodies. 

Nature  of  the  Problem.  Before  entering  upon  an  ac- 
count of  this  movement,  as  evidenced  by  the  action  taken  by 
the  several  states,  it  is  desirable  that  two  things  should  be  made 
known:  first,  the  nature  of  the  problem,  and  second,  the  con- 
ditions confronting  the  states  in  their  efforts  to  work  out  this 
problem. 

II 


BUDGETARY  REFORM  IN  THE  STATES 

As  we  have  pointed  out  in  our  preface  to  the  present  volume, 
the  problem  of  a  budget,  as  a  problem,  has  been  subjected  to 
'  detailed  analysis  in  our  companion  volume,  "The  Problem  of 
a  National  Budget."  To  reproduce  this  analysis  here  would 
involve  a  repetition  that  is  scarcely  justified.  The  reader  is 
accordingly  referred  to  our  discussion  of  the  subject,  as  there 
given,  to  which  it  is  desired  to  add  the  urgent  suggestion  that 
this  account  be  read  before  a  consideration  of  the  account 
given  in  the  following  pages  of  the  action  taken  by  the  several 
states  in  the  way  of  budgetary  reform  is  entered  upon.  Only 
as  one  has  firmly  in  mind  the  analysis  there  made  can  one  fol- 
low with  full  understanding  the  criticism  here  made  of  the 
significance  of  the  action  that  has  been  taken  by  each  state. 
Contenting  ourselves,  therefore,  with  this  reference,  we  now 
turn  to  a  consideration  of  the  conditions  confronting  the 
states  in  their  attempts  to  work  out  this  problem. 

In  broad  outline  it  may  be  stated  that  budgetary  reform  in 
the  states  requires  progress  along  three  linesVthe  establish- 
ment of  an  integrated  administrative  system;  the  requirement 
that  the  governor,  as  head  of  this  system,  shall  prepare  and 
submit  to  the  legislature  a  consolidated  financial  statement, 
or  budget,  setting  forth  the  financial  operations  of  the  govern- 
ment in  the  past,  present  treasury  conditions  and  his  revenue 
and  expenditure  program  for  the  ensuing  fiscal  period  j^and 
the  reform  of  legislative  procedure  governing  the  considera- 
tion and  taking  action  upon  such  proposals.  A  complete  his- 
tory of  budgetary  reform  in  the  states  would  thus  require  a 
consideration  of  the  progress  that  has  been  made  in  each  of 
these  three  directions. 

For  reasons  which  must  be  apparent  it  will  not  be  feasible 
for  us  here  to  attempt  to  set  forth  in  detail  the  whole  history 
of  administrative  reform  in  the  several  states.  Though  re- 
form in  this  field  constitutes,  as  we  have  indicated,  an  essen- 
tial feature  of  budgetary  reform,  since  without  a  properly  inte- 
grated system  of  administration  a  real  budgetary  system  can- 
not be  established,  nevertheless  much  that  has  been  done  in 

12 


ORIGIN  OF  MOVEMENT 

this  direction  has  not  had  for  its  purpose  the  establishment  of 
a  budgetary  system.  The  movement  for  administrative  re- 
form, in  a  word,  has  had  an  independent  history,  and  it  was 
not  until  the  rise  of  the  modern  movement  for  budgetary  re- 
form that  the  close  connection  between  the  two  was  seen.  All 
that  we  can  hope  to  do  here,  therefore,  is  to  point  out,  in 
general  terms,  some  of  the  more  significant  features  of  this 
movement  for  administrative  reform,  and,  in  our  detailed  con- 
sideration of  the  movement  for  budgetary  reform  in  the 
states  individually,  to  consider  those  steps  which  have  been 
taken  in  direct  conjunction  with  action  having  for  its  purpose 
the  establishment  of  a  budgetary  system. 

As  regards  the  more  significant  features  of  the  movement 
for  administrative  reform  generally,  first  mention  should  be 
made  of  the  movement  for  making  the  governors  of  states  the 
legal  and  actual  heads  of  the  administrative  branch  of  the  gov- 
ernment.  The  accomplishment  of  this  important  reform 
means  the  radical  recasting,  in  most  cases,  of  the  political 
system  of  the  states.  It  means,  in  the  first  place,  the  abandon- 
ment of  the  system  of  selecting  the  heads  of  administrative 
departments  and  other  important  officers  by  means  of  the  bal- 
lot, and  the  establishment  of  the  system  under  which  these  of- 
ficers will  hold  office  through  appointment  by  the  governor. 
Correlative  with  this  will  be  the  definite  establishment  of  the 
principle  that  these  officers  are  the  administrative  subordinates 
of  the  governor  and,  as  such,  subject  at  least  to  the  latter 's 
general  direction,  supervision  and  control.  This  is  the  re- 
form which  is  sought  by  the  widespread  demand  for  what  is 
known  as  the  short  ballot. 

Another  reform  having  in  view  the  same  end  of  bringing 
into  existence  an  integrated  administrative  system  is  that  hav- 
ing for  its  purpose  the  establishment  of  a  uniform  system 
of  accounting  and  reporting  for  all  state  services.  Without 
such  a  system  it  is  impossible  for  the  governor  effectively  to 
exercise  his  functions  as  administrator  in  chief  or  to  prepare 
a  properly  constructed  budget,  or  for  the  legislature  intel- 


BUDGETARY  REFORM  IN  THE  STATES 

ligently  to  determine  the  manner  in  which  funds  granted  in 
the  past  have  been  expended  or  reach  a  decision  in  respect  to 
what  funds  shall  be  granted  for  the  future.  The  establish- 
ment of  such  a  system  means  that  authority  shall  be  granted 
to  some  officer  or  board  to  prescribe  the  system  of  account- 
ing and  reporting  that  shall  be  employed  by  all  state  depart- 
ments and  institutions,  and  to  make  such  examinations  of  the 
manner  in  'which  the  financial  affairs  of  these  bodies  are  being 
conducted  as  will  ensure  that  these  regulations  are  being  prop- 
erly obeyed,  that  revenues  are  being  properly  collected,  and 
that  expenditures  are  being  made  with  due  economy  and  ef- 
ficiency. 

Steady  progress  has  been  made  in  recent  years  in  this 
direction.  When  adequate  powers  were  not  vested  in  the 
auditor  or  some  other  officer  of  the  state  to  prescribe  and 
control  accounting  and  reporting  methods,  the  deficiency  has 
been  corrected;  and  when  powers  of  this  character  were  already 
possessed  by  some  officer  but  were  not  exercised,  steps  have 
been  taken  to  see  that  they  were.  In  many  cases,  as  will  be 
seen  by  reference  to  the  acts  reproduced  in  our  consideration 
of  budgetary  reform  in  the  states  individually,  provision  has 
been  made  for  the  establishment  in  the  office  of  the  auditor 
or  comptroller  of  a  special  division  of  inspection  and  control 
for  the  performance  of  this  duty. 

Still  another  very  significant  movement  has  been  that  for 
the  establishment  of  strong  central  organs  of  financial  or 
general  administrative  control.  These  organs  are  of  two  kinds : 
those  having  jurisdiction  over  the  operation  of  institutions,  as 
distinguished  from  administrative  departments,  and  those  hav- 
ing authority  in  respect  to  the  latter  or  to  both  classes.  These 
bodies  indiscriminately  are  usually  designated  as  state  boards 
of  control,  and  only  a  reading  of  the  acts  regarding  them  will 
determine  the  scope  of  their  powers.  The  movement  for  the 
establishment  of  state  boards  of  control  having  jurisdiction  in 
respect  to  state  institutions,'  that  is,  ones  supported  in  whole  or 
in  part  by  state  appropriations,  preceded  that  for  the  creation 

14 


ORIGIN  OF  MOVEMENT 

of  boards  having  authority  in  respect  to  administrative  de- 
partments and  has  proceeded  much  further.  It  has,  in  fact, 
gone  so  far  that  it  may  be  stated  that  it  is  now  the  settled 
policy  of  probably  the  majority  of  the  states  to  make  use  of 
a  body  of  this  character  for  the  purpose  of  exercising  a  super- 
vision and  control  over  institutions  receiving  a  grant  of  funds 
from  the  state  treasury. 

The  creation  of  these  bodies  is  of  great  significance  from 
the  standpoint  of  budgetary  control  since  they  constitute  ef- 
fective organs  for  the  prescribing  of  the  system  of  financial 
management  that  shall  be  employed  by  these  institutions  and 
for  revising  and  correlating  their  demands  for  appropriations. 
Their  creation  thus  means  an  important  step  towards  the  de- 
vising of  a  proper  budgetary  system  for  the  states. 

Of  still  greater  significance  is  the  creation  of  boards  of  the 
second  character,  those  having  a  like  jurisdiction  and  author- 
ity over  the  regular  administrative  departments.  These  bodies 
have  made  an  appearance  later  than  those  of  the  first  class 
and  their  establishment  may  be  deemed  to  be  an  integral  part 
of  the  modern  budgetary  reform  movement.  They  furnish 
the  organ  for  the  administration  of  a  budgetary  system  which 
has  been  shown  to  be  such  an  essential  step  if  adequate  pro- 
vision is  to  be  made  not  only  for  the  introduction  of  a  proper 
budgetary  system  but  its  proper  operation  after  it  is  intro- 
duced. i 

Finally,  many  state  legislatures  have  taken  vigorously  in 
hand  the  matter  of  reforming  their  rules  of  procedure  govern- 
ing the  consideration  and  enactment  of  appropriation  bills. 
Action  in  this  direction  likewise  constitutes  an  essential  part 
of  the  general  movement  for  budgetary  reform.  As  will  be 
seen  when  the  action  of  the  states  is  considered  individually, 
the  same  statutes  in  many  cases  relate  to  this  matter  as  well 
as  to  that  of  the  formulation  and  presentation  of  a  budget. 


j 
>p 


CHAPTER  II 

BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL 
STATES:  MARYLAND,  UTAH,  NEW  MEXICO 

Maryland.  Budgetary  reform  in  Maryland  is  of  especial 
interest  from  two  standpoints:  it  is  the  first  state  definitely 
to  adopt  the  principle  of  an  executive  budget  by  means  of  an 
amendment  to  its  constitution;  and  this  reform  was  accom- 
plished as  the  result  of  a  political  campaign  in  which  this  was 
a  prominent  issue. 

In  1915  it  became  apparent  that  appropriations  had  been 
made  on  such  a  scale  by  the  legislature  that  funds  were  not 
available  to  meet  authorized  liabilities.  Mr.  Harvey  S.  Chase, 
a  certified  accountant,  was  appointed  to  make  an  investigation 
of  the  finances  of  the  state,  and  his  report  showed  that  on 
September  30,  1915,  the  state  treasury  was  confronted  with  a 
deficit  of  $i,  446,555.81.  l  As  a  result  of  this  exposure  the 
Democratic  Party  inserted  in  its  platform  for  the  campaign  of 
the  election  of  the  governor  and  other  state  officers  in  1915 
the  following  plank  pledging  the  party,  if  successful,  to  take 
steps  looking  to  the  introduction  of  a  budgetary  system  as  the 
only  adequate  means  of  preventing  a  recurrence  of  existing 
unsatisfactory  conditions. 

We  pledge  the  adoption  of  what  is  known  as  the  Budget 

^"'  System.     The  basis  of  the  system  shall  be  a  report  made 

either  by  the  Governor  or  by  the  Board  of  Public  Works  to 

the  Legislature  of  the  estimated  income  of  the  state  during 

the  succeeding  two  years,  together  with  recommendations  as 

1  Report  to  Hon.  Emerson  C.  Harrington,  Comptroller  of  the 
Treasury  concerning  the  Financial  Condition  of  the  State  by  Harvey 
S.  Chase,  See  Municipal  Research,  No.  73,  p.  30. 

16 


BUDGETARY  LEGISLATION 

to  the  appropriations  or  expenditures  to  be  made  for  all  pur- 
poses during  the  same  period  of  time.  The  Legislature  may 
reduce  or  eliminate  the  items  for  appropriations  or  expendi- 
tures (except  when  this  would  affect  the  state's  outstanding 
obligations)  but  shall  not  increase  the  same,  and  no  appropria- 
tions shall  be  expended  for  any  purpose  other  than  the  purpose 
specified  in  the  Budget.  Proper  provision  shall  be  made  for 
emergencies  or  contingencies. 

Until  the  Budget  System  can  be  made  effective  we  pledge 
the  Democratic  members  of  the  Legislature  to  keep  the 
expenses  of  the  state  within  the  income  of  the  state,  and  the 
Governor  to  exercise  his  veto  power  for  the  same  purpose. 

In  connection  with  the  Budget  System,  we  favor  the  adop- 
tion of  a  uniform  fiscal  year  for  all  state  officers  and  depart- 
ments and  for  all  institutions  receiving  state  aid.  We  recom- 
mend that  all  continuing  appropriations  be  repealed  and  that 
hereafter  all  appropriations  shall  be  included  in  two  general 
appropriation  bills,  one  for  each  of  the  two  fiscal  years  inter- 
vening between  the  adjournment  of  one  Legislature  and  the 
convening  of  the  next. 

The  Commission  created  by  the  First  Plank  of  this  Plat- 
form shall  be  charged  with  the  duty  of  devising  and  recom- 
mending a  detailed  plan  for  the  Budget  System. 

The  Republican  platform  likewise  endorsed  the  budget  plank 
and  practically  all  the  issues  raised  by  the  Democratic  plank 
that  has  just  been  quoted.  The  Democratic  Convention,  how- 
ever, took  the  unusual  step  of  naming  a  commission  of  dis- 
tinguished citizens  of  the  state,  with  President  Frank  J.  Goo 
now  as  its  chairman,  to  formulate  a  specific  program  for  the 
accomplishment  of  the  reform  to  which  the  party  had  pledged 
itself. 

This  commission  made  a  brief,  but  exceptionally  able,  re-    S 
port  which  was  incorporated  in  the  "Senate  Journal,"  in  which  ® 
it  held  that  the  reform  could  only  be  accomplished  by  'way  of 
constitutional   amendment   and    submitted   the   draft   of    an 
amendment  to  the  constitution  that  would  accomplish  the  pur- 
pose.1 

1  Report  of  Commission  on  Economy  and  Efficiency  of  the  State  of  0 
Maryland,  1916  Senate  Jojmial,  January  28,  1916,  pp.  129-132. 

17 


BUDGETARY  REFORM  IN  THE  STATES 

This  draft  of  an  amendment  was  passed  by  the  legislature 

unanimously,  it  not  being  made  a  party  matter,  substantially 

in  the  form  in  which  it  was  prepared  by  the  commission  on 

March  28,  1916;  and  on  November  7  of  the  same  year  was 

%/ ratified  by  the  people  by  the  large  vote  of  77,478  to  38,100. 

The  following  statement  of  the  commission  that  drafted  the 
amendment,  regarding  the  purposes  they  sought  to  accomplish 
through  the  amendment,  is  of  interest  as  bringing  out  in  brief 
compass  the  more  fundamental  features  of  the  change : 

Our  thought  in  drafting  the  proposed  amendment  has  been: 
First.  To  impose  upon  the  Governor  the  sole  responsi- 
bility, within  the  limits  of  the  Constitution  and  the  provisions 
of  existing  law,  of  presenting  to  the  legislature  a  complete  and 
comprehensive  statement  of  the  needs  and  resources  of  the 
State  based  upon : 

a.  Estimates  made  by  those  applying  for  State  moneys ; 

b.  Evidence  brought  out  at  public  hearings  on  those  esti- 

mates; and 

c.  Administrative  revision  by  the  Governor  of  all  estimates 

except  those  for  the  Legislature  and  the  Judiciary  and 
for  purposes  for  which  provision  has  been  made  by  the 
Constitution  or  existing  law. 

Second.  To  make  it  impossible  for  the  Legislature  so  to 
change  the  plans  proposed  by  the  Governor  as  to  produce  a 
deficit;  but 

Third.  To  permit  the  Legislature  to  make  provision  for 
any  purpose  not  included  in  the  Governor's  plan  on  the  con- 
dition that  it  provide  also  for  the  revenue  which  the  accom- 
plishment of  its  purpose  necessitates. 

Fourth.  We  have  not  attempted  in  the  amendment  pro- 
posed to  deal  with  existing  continuing  appropriations.  We 
have  felt  that  it  would  be  improper  to  repeal  such  appropria- 
tions by  constitutional  provision.  Indeed,  so  far  as  a  continu- 
ing appropriation  is  a  part  of  a  contractual  obligation,  as  for 
example,  a  continuing  appropriation  for  interest  and  sinking 
fund  for  the  State  debt,  a  repeal  of  such  an  appropriation  in  the 
State  Constitution  would  be  unavailing  since  it  would  contra- 
vene that  provision  of  the  United  States  Constitution  which 
forbids  a  State  to  pass  any  law  impairing  the  obligation  of  a 
contract. 


BUDGETARY  LEGISLATION 

We  have,  however,  provided  in  the  amendment  submitted 
that  the  Legislature  may  from  time  to  time  enact  such  laws 
not  inconsistent  with  the  amendment  as  may  be  necessary  and 
proper  to  carry  out  any  of  its  provisions.  Under  this  clause 
the  Legislature  may  repeal  all  continuing  appropriations  not 
of  a  contractual  character.  Such  a  policy  it  is  to  be  remem- 
bered is  approved  by  the  platform  of  the  party  under  the 
instructions  of  which  this  Commission  has  been  working.  It 
is,  however,  a  policy  which  should  be  realized  rather  by 
legislation  than  by  constitutional  provision. 

Out  of  abundant  caution  and  in  order  to  carry  out  the  pur- 
pose of  the  platform  to  protect  the  "State's  outstanding  obli- 
gations" we  have  left  it  in  the  power  of  the  Legislature  to  pass 
at  any  time  and  in  the  usual  manner  an  appropriation  bill  for 
the  payment  of  all  the  State's  obligations  protected  by  the 
provision  of  the  Constitution  of  the  United  States  forbidding 
a  State  to  pass  any  law  impairing  the  obligation  of  contracts. 

It  will  be  noted  that  no  effort  was  made  to  curtail  by  means 
of  that  amendment  the  evils  of  continuing  appropriations. 
That  the  practice  of  providing  for  the  support  of  services  and 
institutions  by  means  of  continuing  appropriations  is  an  evil, 
and  that  it  represents  a  serious  infraction  of  the  general  prin- 
ciple that  a  budget  should  get  before  the  legislature  at  one  [/ 
time  the  whole  program  of  expenditures,  is  evident  from  the 
following  comment  of  the  Governor  of  Maryland  regarding 
this  matter.1 

Some  legislator  interested  in  any  institution  of  learning, 
hospital,  beneficent  or  charitable  institution  or  organization 
would  procure  an  appropriation  for  it,  and  would  have  it 
marked  "annual,"  and  it  would  go  on  forever,  would  not  have 
to  pass  the  gauntlet  of  the  next  Legislature,  and  in  a  year  or 
so  the  institution  would  ask  for  more  and  get  more,  and  few, 
if  any,  of  the  present  legislators  would  know  of  the  old  appro- 
priation. Some  of  these  continuing  appropriations  had  been 
passed  and  arranged  for  over  100  years  ago,  so  that  with  the 
special  bills  appropriating  money,  and  with  all  these  continuing 

1  The  Executive  Budget,  by  Gov.  Emerson  C.  Harrington  of  Mary- 
land, Governors'  Conference  Proceedings,  1916,  pp.  28-29. 

19 


BUDGETARY  REFORM  IN  THE  STATES 

appropriations  the  General  Appropriation  or  Omnibus  Bills 
would  be  far  short  of  showing  the  total  expenses  or  appro- 
priations of  the  State  Government.  Several  attempts  had  been 
made  before  to  repeal  those  acts  calling  for  continuing  appro- 
priations but  they  had  always  "died-a-borning."  For  behind 
the  continuing  appropriations  all  the  lobbying  elements, 
benefited  interests,  and  forces  of  obstruction  entrenched  them- 
selves for  defence. 


Governor  Harrington  states,  however,  in  the  speech  from 
which  the  foregoing  is  quoted,  that  the  legislature  in  fact  re- 
pealed most  if  not  all  of  the  acts  authorizing  continuing  ap- 
propriations of  this  character. 

In  concluding  the  account  of  the  progress  made  by  Mary- 
land in  putting  the  system  of  financial  administration  upon  a 
budgetary  basis,  it  should  be  pointed  out  that  much  yet  re- 
mains to  be  done  to  make  the  system  thoroughly  effective. 
The  system  of  auditing,  accounting  and  reporting  must  be  re- 
vised so  as  to  develop  automatically  the  information  required 
for  budgetary  purposes.  The  position  of  the  Governor  as 
administrator  in  chief  with  adequate  powers  to  supervise  and 
control  subordinate  administrative  officers  must  be  more  firmly 
established  and  recognized.  And,  finally,  more  definite  pro- 
vision must  be  made  for  a  budgetary  organ  which,  acting  as 
the  direct  agent  of  the  Governor,  will  enable  the  latter  more 
effectively  to  keep  in  touch  with  the  organization,  activities 
and  procedure  of  the  several  administrative  departments  and 
to  discharge  the  burden  of  responsibility  laid  upon  him  of 
recommending  in  detail  the  provision  that  should  be  made  each 
year  for  the  conduct  of  these  services. 

The  importance  of  this  amendment,  constituting  as  it  does  a 
landmark  in  the  history  of  budgetary  reform  in  the  United 
States,  warrants  its  reproduction  in  full: 

Article  III,  Section  52.  Constitution  of  Maryland,  regulating 
the  making  .of  appropriations  by  the  General  Assembly  of 
Maryland.  Amendment  adopted  November  7,  1916. 

20 


BUDGETARY  LEGISLATION 

The  General  Assembly  shall  not  appropriate  any  money  out 
of  the  Treasury  except  in  accordance  with  the  following  pro- 
visions : 

Sub-Section  A: 

Every  appropriation  bill  shall  be  either  a  Budget  Bill,  or  a 
Supplementary  Appropriation  Bill,  as  hereinafter  mentioned. 

Sub-Section  B: 

First.  Within  twenty  days  after  the  convening  of  the  Gen- 
eral Assembly  (except  in  the  case  of  a  newly  elected  Governor, 
and  then  within  thirty  days  after  his  inauguration),  unless 
such  time  shall  be  extended  by  the  General  Assembly  for  the 
session  at  which  the  Budget  is  to  be  submitted,  the  Governor 
shall  submit  to  the  General  Assembly  two  budgets,  one  for 
each  of  the  ensuing  fiscal  years.  Each  budget  shall  contain 
a  complete  plan  of  proposed  expenditures  and  estimated  rev- 
enues for  the  particular  fiscal  year  to  which  it  relates;  and 
shall  show  the  estimated  surplus  or  deficit  of  revenues  at  the 
end  of  such  year.  Accompanying  each  budget  shall  be  a 
statement  showing:  (i)  the  revenues  and  expenditures  for 
each  of  the  two  fiscal  years  next  preceding;  (2)  the  current 
assets,  liabilities,  reserves  and  surplus  or  deficit  of  the  State; 

(3)  the  debts  and  funds  of  the  State;  (4)  an  estimate  of  the 
State's  financial  condition  as  of  the  beginning  and  end  of  each 
of  the  fiscal  years  covered  by  the  two  budgets  above  provided ; 
(5)  any  explanation  the  Governor  may  desire  to  make  as  to 
the  important  features  of  any  budget  and  any  suggestion  as 
to  methods  for  the  reduction  or  increase  of  the  State's  revenue. 

Second.  Each  budget  shall  be  divided  into  two  parts,  and 
the  first  part  shall  be  designated  "Governmental  Appropria- 
tions" and  shall  embrace  an  itemized  estimate  of  the  appro- 
priations :  ( i )  for  the  General  Assembly  as  certified  to  the 
Governor  in  the  manner  hereinafter  provided;  (2)  for  the 
Executive  Department;  (3)  for  the  Judiciary  Department,  as 
provided  by  law,  certified  to  the  Governor  by  the  Comptroller ; 

(4)  to  pay  and  discharge  the  principal  and  interest  of  the  debt 
of  the  State  of  Maryland  in  conformity  with  Section  34  of 
Article  III  of  the  Constitution,  and  all  laws  enacted  in  pursu- 
ance thereof;  (5)  for  the  salaries  payable  by  the  State  under 
the  Constitution  and  laws  of  the  State;  (6)  for  the  establish- 
ment and  maintenance  throughout  the  State  of  a  thorough  and 

21 


BUDGETARY  REFORM  IN  THE  STATES 

efficient  system  of  public  schools  in  conformity  with  Article 
VIII  of  the  Constitution  and  with  the  laws  of  the  State;  (7) 
for  such  other  purposes  as  are  set  forth  in  the  Constitution 
of  the  State. 

Third.  The  second  part  shall  be  designated  "General  Ap- 
propriations/' and  shall  include  all  other  estimates  of  appro- 
priations. 

The  Governor  shall  deliver  to  the  presiding  officer  of  each 
house  the  budgets  and  a  bill  for  all  the  proposed  appropriations 
of  the  budgets  clearly  itemized  and  classified ;  and  the  presid- 
ing officer  of  each  house  shall  promptly  cause  said  bill  to  be 
introduced  therein,  and  such  bill  shall  be  known  as  the 
"Budget  Bill."  The  Governor  may,  before  final  action 
thereon  by  the  General  Assembly  amend  or  supplement  either 
of  said  budgets  to  correct  an  oversight  or  in  case  of  an  emer- 
gency, with  the  consent  of  the  General  Assembly  by  delivering 
such  an  amendment  or  supplement  to  the  presiding  officers  of 
both  houses ;  and  such  amendment  or  supplement  shall  thereby 
become  a  part  of  said  budget  bill  as  an  addition  to  the  items 
of  said  bill  or  as  a  modification  of  or  a  substitute  for  any  item 
of  said  bill  such  amendment  or  supplement  may  affect. 

The  General  Assembly  shall  not  amend  the  budget  bill  so  as 
to  affect  either  the  obligations  of  the  State  under  Section  34  of 
Article  III  of  the  Constitution,  or  the  provision  made  by  the 
laws  of  the  State  for  the  establishment  and  maintenance  of  a 
system  of  public  schools,  or  the  payment  of  any  salaries 
required  to  be  paid  by  the  State  of  Maryland  by  the  Constitu- 
tion thereof ;  and  the  General  Assembly  may  amend  the  bill  by 
increasing  or  diminishing  the  items  therein  relating  to  the 
General  Assembly,  and  by  increasing  the  items  therein  relating 
to  the  judiciary,  but  except  as  hereinbefore  specified,  may  not 
alter  the  said  bill  except  to  strike  out  or  reduce  items  therein, 
provided,  however,  that  the  salary  or  compensation  of  any 
public  officer  shall  not  be  decreased  during  his  term  of  office; 
and  such  bill  when  and  as  passed  by  both  houses  shall  be  a 
law  immediately  without  further  action  by  the  Governor. 

Fourth.  The  Governor  and  such  representatives  of  the  ex- 
ecutive departments,  boards,  officers  and  commissions  of  the 
State  expending  or  applying  for  State's  moneys,  as  have  been 
designated  by  the  Governor  for  this  purpose,  shall  have  the 
right,  and  when  requested  by  either  house  of  the  Legislature,  it 
shall  be  their  duty  to  appear  and  be  heard  with  respect  to  any 

22 


BUDGETARY  LEGISLATION 

budget  bill  during  the  consideration  thereof,  and  to  answer  in- 
quiries relative  thereto. 

Sub-Section  C:  Supplementary  Appropriation  Bills: 

Neither  house  shall  consider  other  appropriations  until  the 
Budget  Bill  has  been  finally  acted  upon  by  both  houses,  and 
no  such  other  appropriation  shall  be  valid  except  in  accordance 
with  the  provisions  following :  ( i )  Every  such  appropriation 
shall  be  embodied  in  a  separate  bill  limited  to  some  single 
work,  object  or  purpose  therein  stated  and  called  herein  a 
Supplementary  Appropriation  Bill;  (2)  Each  Supplementary 
Appropriation  Bill  shall  provide  the  revenue  necessary  to  pay 
the  appropriation  thereby  made  by  a  tax,  direct  or  indirect,  to 
be  laid  and  collected  as  shall  be  directed  in  said  Bill;  (3)  No 
Supplementary  Appropriation  Bill  shall  become  a  law  unless 
it  be  passed  in  each  house  by  a  vote  of  a  majority  of  the  whole 
number  of  the  members  elected;  and  the  yeas  and  nays  re- 
corded on  its  final  passage;  (4)  Each  Supplementary  Appro- 
priation Bill  shall  be  presented  to  the  Governor  of  the  State 
as  provided  in  Section  17  of  Article  II  of  the  Constitution 
and  thereafter  all  the  provisions  of  said  Section  shall  apply. 

Nothing  in  this  amendment  shall  be  construed  as  preventing 
the  Legislature  from  passing  at  any  time  in  accordance  with 
the  provisions  of  Section  28  of  Article  III  of  the  Constitution 
and  subject  to  the  Governor's  power  of  approval  as  provided 
in  Section  17  of  Article  II  of  the  Constitution  an  appropria- 
tion bill  to  provide  for  the  payment  of  any  obligation  of  the 
State  of  Maryland  within  the  protection  of  Section  10  of 
Article  I  of  the  Constitution  of  the  United  States. 

Sub-Section  D:  General  Provisions: 

First.  If  the  Budget  Bill  shall  not  have  been  finally  acted 
upon  by  the  Legislature  three  days  before  the  expiration  of 
its  regular  session,  the  Governor  may,  and  it  shall  be  his  duty 
to  issue  a  proclamation  extending  the  session  for  such  further 
period  as  may  in  his  judgment  be  necessary  for  the  passage  of 
such  Bill;  but  no  other  matter  than  such  Bill  shall  be  con- 
sidered during  such  extended  session  except  a  provision  for 
the  cost  thereof. 

Second.  The  Governor  for  the  purpose  of  making  up  his 
budgets  shall  have  the  power,  and  it  shall  be  his  duty,  to 
require  from  the  proper  State  officials,  including  herein  all 

23 


BUDGETARY  REFORM  IN  THE  STATES 

executive  departments,  all  executive  and  administrative  offices, 
bureaus,  boards,  commissions  and  agencies  expending  or 
supervising  the  expenditure  of,  and  all  institutions  applying 
for  State  moneys  and  appropriations,  such  itemized  estimates 
and  other  information,  in  such  form  and  at  such  times  as  he 
shall  direct.  The  estimates  for  the  legislative  department, 
certified  by  the  presiding  officer  of  each  house,  of  the  judiciary, 
as  provided  by  law,  certified  by  the  Comptroller,  and  for  the 
public  schools,  as  provided  by  law,  shall  be  transmitted  to  the 
Governor,  in  such  form  and  at  such  times  as  he  shall  direct, 
and  shall  be  included  in  the  budget  without  revision. 

The  Governor  may  provide  for  public  hearings  on  all  esti- 
mates and  may  require  the  attendance  at  such  hearings  of  rep- 
resentatives of  all  agencies,  and  of  all  institutions  applying  for 
State  moneys.  After  such  public  hearings  he  may  in  his  dis- 
cretion revise  all  estimates  except  those  for  the  legislative  and 
judiciary  departments,  and  for  the  public  schools  as  provided 
by  law. 

Third.  The  Legislature  may,  from  time  to  time,  enact  such 
laws,  not  inconsistent  with  this  Section,  as  may  be  necessary 
and  proper  to  carry  out  its  provisions. 

Fourth.  In  the  event  of  any  inconsistency  between  any 
of  the  provisions  of  this  Section  and  any  of  the  other  provi- 
sions of  the  Constitution,  the  provisions  of  this  Section  shall 
prevail.  But  nothing  herein  shall  in  any  manner  affect  the 
provisions  of  Section  34  of  Article  III  of  the  Constitution  or 
of  any  laws  heretofore  or  hereafter  passed  in  pursuance 
thereof,  or  be  construed  as  preventing  the  Governor  from  call- 
ing extraordinary  sessions  of  the  Legislature,  as  provided  by 
Section  16  of  Article  II,  or  as  preventing  the  Legislature  at 
such  extraordinary  sessions  from  considering  any  emergency 
appropriation  or  appropriations. 

If  any  item  of  any  appropriation  bill  passed  under  the  pro- 
visions of  this  Section  shall  be  held  invalid  upon  any  ground, 
such  invalidity  shall  not  affect  the  legality  of  the  Bill  or  of 
any  other  item  of  such  Bill  or  Bills. 

,  Utah.  Utah,  on  February  21,  1917,  passed  one  of  the 
most  comprehensive  budget  acts  that  has  been  enacted  by  any 
commonwealth  of  the  United  States.  This  act  is  modeled 
closely  upon  the  budget  amendment  of  Maryland.  It  not  only 
provides  that  the  Governor  shall  submit  to  each  session  of 

24 


BUDGETARY  LEGISLATION 

the  legislature  a  comprehensive  budget,  with  proper  support- 
ing statements  regarding  past  revenues  and  expenditures  and 
existing  assets  and  liabilities  of  the  state,  but  that  its  items  of 
appropriation  bills  based  upon  this  budget,  which  shall  also  be 
prepared  by  the  Governor,  shall  not  be  altered  by  the  legisla- 
ture except  by  way  of  elimination  or  reduction  of  such  items. 
The  act  thus  provides  for  an  executive  budget  in  the  fullest 
sense  of  the  term.  Special  care  is  taken  to  make  it  clear  that 
the  budget  thus  formulated  shall  represent  the  judgment  of 
the  Governor  in  respect  to  what  sums  shall  be  voted,  a  clause 
of  its  act  reading  that  "the  Governor  may  in  his  discretion 
revise  all  estimates,  except  those  relating  to  the  legislative  de- 
partment, those  providing  for  the  payment  of  the  principal 
and  interest  of  the  State  debt,  and  for  the  salaries  and  expendi- 
tures specified  by  the  constitution  and  laws  of  the  State." 

To  ensure  the  proper  working  of  this  system,  the  act  fur- 
ther provides  that  neither  house  shall  consider  any  other  ap- 
propriation, except  an  emergency  appropriation  for  the  im- 
mediate expense  of  the  state  legislature,  until  the  budget  ap- 
propriation bill  has  been  finally  acted  upon  by  both  houses; 
and  that  every  other  proposed  appropriation  shall  be  made  the 
subject  of  a  special  bill,  which  shall  relate  to  but  a  single  work, 
object  or  purpose,  and  shall  not  be  valid  unless  there  is  free 
money  in  the  treasury  to  meet  it,  as  the  act  carrying  it  pro- 
vides for  the  necessary  revenue  to  meet  it  through  the  im- 
position of  a  special  tax  or  other  means. 

Following  is  a  copy  of  this  act: 

An  Act  regulating  the  making  of  appropriations  by  the  State 
Legislature.  Approved  February  21,  1917.  (Acts  of  1917, 
Ch.  15.) 

Section  i.  Within  twenty  days  after  the  convening  of  the 
State  Legislature  the  Governor  shall  submit  a  budget  for  the 
two  ensuing  fiscal  years.  Said  budget  shall  contain  a  complete 
plan  of  proposed  expenditures  and  estimated  revenues  for  the 
ensuing  biennium.  Accompanying  said  budget  shall  be  a 
statement  showing  the  revenues  and  expenditures  for  the  two 

25 


BUDGETARY  REFORM  IN  THE  STATES 

fiscal  years  next  preceding;  the  current  assets,  liabilities,  re- 
serves, and  surplus  or  deficit  of  the  State ;  the  debts  and  funds 
of  the  State;  an  estimate  of  the  State's  financial  condition  as 
of  the  beginning  and  end  of  the  biennium  covered  by  the 
budget ;  and  any  explanation  the  Governor  may  desire  to  make 
as  to  the  important  features  of  the  budget  and  any  suggestion 
as  to  methods  for  the  reduction  or  increase  of  the  State's 
revenue. 

Said  budget  shall  embrace  an  itemized  estimate  of  the  appro- 
priations for  the  State  Legislature  as  certified  to  the  Governor 
by  the  President  of  the  Senate  and  the  Speaker  of  the  House; 
for  the  Executive  Department ;  for  the  Judiciary  Department ; 
to  pay  and  discharge  the  principal  and  interest  of  the  debt  of 
the  State  of  Utah ;  for  the  salaries  payable  by  the  State  under 
the  Constitution  and  Laws  of  the  State;  and  for  such  other 
purposes  as  are  set  forth  in  the  Constitution  and  Laws  of  the 
State;  and  for  all  other  appropriations. 

The  Governor  shall  deliver  to  the  presiding  officer  of  each 
House  the  budget,  and  a  bill  for  all  the  proposed  appropria- 
tions of  the  budget,  clearly  itemized  and  classified;  and  the 
presiding  officer  of  each  House  shall  promptly  cause  said  bill 
to  be  introduced  therein.  The  Governor  may,  before  final 
action  thereon  by  the  State  Legislature,  amend  or  supplement 
the  budget  to  correct  an  oversight,  or  in  case  of  an  emergency, 
with  the  consent  of  the  State  Legislature,  by  delivering  such 
amendment  or  supplement  to  the  presiding  officers  of  both 
Houses ;  and  such  amendment  or  supplement  shall  thereby  be- 
come a  part  of  said  budget  bill  as  an  addition  to  the  items  in 
said  bill  or  as  a  modification  of  or  substitute  for  any  item  in 
said  bill  such  amendment  or  supplement  may  affect. 

The  State  Legislature  may  not  alter  said  bill  except  to 
strike  out  or  reduce  items  therein;  provided,  however,  appro- 
priations necessary  for  the  payment  of  interest  or  principal 
due  on  the  public  debt  shall  not  be  reduced  or  eliminated ;  and 
provided  further,  that  the  salary  or  compensation  of  any 
public  officer  shall  not  be  decreased  during  his  term  of  office. 

Neither  House  shall  consider  any  other  appropriation,  ex- 
cept an  emergency  appropriation  for  the  immediate  expense 
of  the  State  Legislature,  until  the  budget  has  been  finally  acted 
upon  by  both  Houses.  Every  appropriation  in  addition  to 
that  provided  for  in  the  budget  shall  be  embodied  in  a  separate 
Act  and  shall  be  limited  to  some  single  work,  object  or  purpose 

26 


BUDGETARY  LEGISLATION 

therein  stated.  No  supplementary  appropriation  shall  be  valid 
if  it  exceeds  the  amount  in  the  State  Treasury  available  for 
such  appropriation,  unless  the  Legislature  making  such  appro- 
priation shall  provide  the  necessary  revenue  to  pay  such  ap- 
propriation by  a  tax,  direct  or  indirect,  to  be  laid  and  collected 
as  shall  be  directed  by  the  State  Legislature;  provided,  that 
such  tax  shall  not  exceed  the  rates  permitted  under  the  Consti- 
tution of  Utah.  This  provision  shall  not  apply  to  appropria- 
tions to  suppress  insurrections,  defend  the  State,  or  assist  in 
defending  the  United  States  in  time  of  war. 

The  Governor,  for  the  purpose  of  making  up  said  budget, 
shall  have  the  power,  and  it  shall  be  his  duty,  to  require  from 
the  proper  State  officials,  including  all  heads  of  executive  and 
administrative  departments  and  State  institutions,  bureaus, 
boards,  commissions,  and  agencies  expending  or  supervising 
the  expenditures  of  State  moneys,  and  all  institutions  applying 
for  State  moneys  and  appropriations,  such  itemized  estimates 
and  other  information,  in  such  form  and  at  such  times  as  he 
may  direct.  The  estimate  for  the  legislative  department,  as 
certified  by  the  presiding  officers  of  both  Houses,  shall  be  in- 
cluded in  the  budget  without  revision  by  the  Governor. 

The  Governor  may  provide  for  hearings  on  all  estimates 
and  may  require  the  attendance  at  such  hearings  of  representa- 
tives of  State  departments  and  institutions  and  of  other  insti- 
tutions or  individuals  applying  for  State  appropriations. 

The  Governor  may  in  his  discretion  revise  all  estimates, 
except  those  relating  to  the  legislative  department,  those  pro- 
viding for  the  payment  of  the  principal  and  interest  of  the 
State  debt,  and  for  the  salaries  and  expenditures  specified  by 
the  Constitution  and  Laws  of  the  State. 

The  total  appropriations  made  and  expenditures  authorized 
by  the  budget  must  not  exceed  the  estimated  revenues  from 
taxes,  fees,  and  all  other  sources  for  the  next  ensuing  bien- 
nium,  which  estimate  shall  be  furnished  the  Governor  by  the 
State  Auditor  at  least  six  months  prior  to  the  convening  of 
the  State  Legislature  in  regular  session. 

If  any  item  in  the  budget  as  enacted  shall  be  held  invalid 
upon  any  ground,  such  invalidity  shall  not  affect  the  budget 
itself  or  any  other  item  in  it. 

Providing,  however,  that  no  Act  appropriating  money 
passed  by  the  Twelfth  Session  of  the  Legislature  shall  be 
affected  by  this  repeal. 

27 


BUDGETARY  REFORM  IN  THE  STATES 

Sec.  2.  All  Acts  and  parts  of  Acts  in  conflict  with  this 
Act  are  hereby  repealed. 

New  Mexico.  On  March  13,  1917,  New  Mexico  passed 
an  act  establishing  definitely  the  principle  of  an  executive 
budget.  All  services  of  the  government  are  required  to  submit 
their  estimates  to  the  Governor.  The  latter  is  directed  to  re- 
vise these  estimates  so  as  to  make  them  conform  to  his  judg- 
ment in  respect  to  what  funds  should  be  appropriated  and  to 
submit  such  revised  estimates  to  the  legislature  as  his  budget. 
This  budget  must  cover  the  revenue  as  well  as  the  expenditure 
side  of  financing  the  state  and  be  accompanied  by  proper  sup- 
porting financial  statements  showing  revenues  and  expendi- 
tures in  the  past,  present  assets  and  liabilities  of  the  state,  etc. 
In  form  the  budget  must  be  so  prepared  as  to  permit  of  easy 
understanding  of  the  conditions  and  proposals  set  forth. 

This  budget  must  be  accompanied  by  a  draft  of  an  appro- 
priation bill  or  bills  to  carry  out  its  provisions  which  it  is  the 
duty  of  the  presiding  officers  of  the  two  houses  to  have  intro- 
duced and  referred  to  the  proper  committees. 

Finally,  the  act  contains  the  four  very  important  provisions 
that  the  Governor  and  heads  of  departments  and  institutions 
shall  have  the  right  to  appear  before  the  legislature  and  be 
heard  in  respect  to  their  estimates;  that  the  legislature  shall 
not  have  the  right  to  increase  any  items  of  expenditure  con- 
tained in  the  Governor's  budget  except  such  as  relate  to  the 
legislative  and  judicial  branches,  though  it  may  reduce  or 
eliminate  items;  that  all  other  proposed  appropriations  must 
be  made  by  separate  bills  each  relating  to  a  single  subject;  and 
that  no  such  other  appropriation  bill  shall  be  considered  until 
final  action  has  been  made  upon  the  general  budget  appropria- 
tion bill  by  both  houses. 

A  copy  of  this  act  follows : 

An  Act  providing  for  a  State  Budget.     Approved,  March  13, 
1917.     (Acts  of  1917,  ch.  81.) 

28 


BUDGETARY  LEGISLATION 

Section  i.  On  or  before  the  3Oth  day  of  November  in  each 
year  next  preceding  the  regular  biennial  session  of  the  Legis- 
lature, the  Governor  shall  require  from  the  head  of  each  and 
every  department,  institution  and  agency  of  the  state  govern- 
ment through  which  any  of  the  state  funds  are  disbursed, 
except  the  Legislature  and  Judicial  Department,  and  the  head 
of  each  and  every  department,  institution  and  agency  of  the 
state  except  the  Legislature  and  the  Judicial  Department,  shall 
prepare  and  submit  to  the  Governor  estimates  of  appropria- 
tions required  to  meet  the  ordinary  financial  needs  of  such 
department,  institution  or  agency,  itemized  as  the  Governor 
may  require,  and  a  statement  in  detail  of  all  moneys  for  which 
any  extraordinary  appropriation  will  be  desired,  during  the 
ensuing  biermium;  which  estimates  shall  be  classified  and 
grouped  according  to  the  relative  importance,  and  in  such 
form  and  detail  as  the  Governor  may  require.  The  Governor 
will  consider  such  estimates  and  may  hold  public  hearings 
thereon,  at  which  hearings  he  may  require  the  attendance  of 
any  officer  or  employee  of  any  department,  institution  or 
agency;  and  the  Governor  shall  thereupon  revise  such  esti- 
mates according  to  his  judgment.  Itemized  estimates  of  the 
financial  needs  of  the  Legislature,  certified  by  the  presiding 
officer  of  each  house,  and  of  the  Judicial  Department  certified 
by  the  Clerk  of  the  Supreme  Court  of  the  State,  shall  be 
transmitted  to  the  Governor  within  fifteen  days  after  the  con- 
vening of  each  regular  session  of  the  Legislature,  for  inclu- 
sion in  the  Budget  by  this  act  provided  for,  without  revision; 
but  the  Governor  may  make  such  recommendations  with  refer- 
ence to  such  estimates  as  he  may  think  proper. 

Sec.  2.  On  or  before  the  3Oth  day  of  each  regular  ses- 
sion of  the  Legislature  the  Governor,  Auditor  and  Attorney 
General  shall  prepare,  and  the  Governor  shall  submit  to  the 
Legislature,  a  Budget  containing  a  detailed  statement  and  esti- 
mate of  all  anticipated  revenues  of  the  state,  and  a  complete 
plan  of  proposed  expenditures  for  the  state  government  dur- 
ing the  ensuing  biennium.  Such  Budget  shall  contain  all  of 
the  estimates  furnished  by  the  several  departments,  institutions 
and  agencies  of  the  state  government,  as  revised  and  certified 
as  aforesaid.  The  Budget  shall  be  accompanied  by  a  bill 
or  bills  covering  all  proposed  appropriations,  in  such  form  and 
detail  as  to  afford  effective  auditing  control  over  expenditures. 
It  shall  also  set  forth  measures  of  taxation,  if  any,  which  the 

29 


BUDGETARY  REFORM  IN  THE  STATES 

Governor  may  propose  for  the  increase  of  state  revenues.  It 
shall  be  accompanied  by  statements  of  assets,  liabilities,  re- 
serves and  surplus  or  deficit,  in  sufficient  detail  and  in  such 
form  as  to  show  the  then  financial  condition  of  the  state,  to- 
gether with  a  comparison  of  such  financial  condition  with  that 
existing  during  the  previous  biennial  period;  also  statements 
showing  actual  revenues  and  expenditures  in  detail  for  the 
preceding  biennium,  and  such  other  statements  or  information 
as  may  be  necessary  for  an  intelligent  consideration  and  deter- 
mination of  and  concerning  the  executive  proposals,  by  the 
Legislature  and  other  persons  concerned.  Prior  to  final  action 
thereon  the  Budget  may  be  amended  or  supplemented.  The 
Budget  shall  be  in  such  form  as  to  be  readily  analyzed  and 
understood ;  it  shall  be  a  public  document  and  shall  be  printed 
as  soon  as  prepared,  and  a  copy  thereof  shall  be  furnished  to 
each  member  of  the  Legislature  and  to  the  State  Auditor,  and 
it  shall  be  given  such  other  publicity  as  the  Governor  may 
deem  proper. 

Immediately  upon  the  submission  of  the  Budget  and  the 
accompanying  appropriation  bill  or  bills,  the  presiding  officer 
of  each  house  shall  refer  the  same  to  the  appropriate  commit- 
tee, and  the  chairman  of  each  such  committee  shall  thereupon 
immediately  cause  such  appropriation  bill  or  bills  to  be  intro- 
duced in  the  house  of  which  he  is  a  member. 

Sec.  3.  For  each  and  every  expenditure  required  by 
the  Budget  not  properly  cognizable  in  the  general  appropria- 
tion bill,  the  Governor  shall  cause  to  be  prepared  and  submitted 
a  separate  appropriation  bill.  During  the  consideration  of 
any  appropriation  bill  so  submitted  with  the  Budget  the  Gov- 
ernor and  the  heads  of  all  departments,  institutions  and 
agencies  of  the  state  concerned,  shall  have  the  right  to  appear 
and  be  heard  by  the  Legislature,  or  either  house  thereof,  in  con- 
nection therewith.  The  Legislature  shall  not  increase  the 
amount  of  any  item  covered  by  appropriation  bills  as  sub- 
mitted by  the  Governor,  other  than  those  covering  items  for 
the  Legislature  or  the  Judicial  Department,  but  may  strike  out 
or  reduce  any  item  or  items  contained  therein.  The  Legisla- 
ture shall  not  consider  further  or  other  appropriations  until 
the  appropriation  bills  submitted  by  the  Governor  shall  have 
been  finally  acted  upon  by  both  houses;  and  each  and  all  of 
such  further  or  other  appropriations  shall  then  be  made  by 
separate  bills,  each  embracing  but  one  subject. 

30 


CHAPTER  III 

BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL 
STATES :  VIRGINIA,  DELAWARE 

Virginia.  In  the  preceding  chapter  consideration  has  been 
had  of  the  legislation  of  three  states  which  have  not  only  pro- 
vided for  an  executively  formulated  budget  but  one  whose 
items  may  not  be  increased  by  the  legislature.  The  present 
chapter  deals  with  the  legislation  of  two  states  which  have 
taken  advanced  ground  in  respect  to  the  establishment  of  the 
principle  of  an  executively  formulated  budget,  but  do  not 
go  so  far  as  to  place  limitations  upon  the  right  of  the  legisla- 
ture to  modify  budgetary  proposals. 

By  an  act  approved  March  16,  1916,  Virginia  provided  forN 
the  appointment  of  a  Commission  on  Economy  and  Efficiency 
which  should  have  the  duty  of  making  a  careful  study  of  the 
organization  and  methods  of  business  of  the  state  and  of  re- 
porting what  changes,  in  its  opinion,  were  required  in  order 
to  put  the  administration  of  the  state's  affairs  upon  a  more 
efficient  and  economical  basis.  This  commission  submitted  an  v 
exceedingly  able  report  on  January  9,  1918.  Among  its  most 
important  recommendations  was  one  urging  in  strongest  pos- 
sible terms  the  passage  of  a  law  that  would  give  to  the  state 
a  budgetary  system.  It  said : 

In  the  opinion  of  the  Commission  on  Economy  and  Effi- 
ciency the  one  thing  that  will  do  more  than  anything  else  to 
place  the  state  government  of  Virginia  on  a  more  business- 
like basis,  would  be  the  introduction  of  a  modern  budget 
system.  The  establishment  of  such  a  system,  in  addition  to 
placing  our  public  affairs  on  a  more  scientific  footing,  would 

31 


BUDGETARY  REFORM  IN  THE  STATES 

bring  about  many  of  the  departmental  changes  that  should  be 
made.1 

The  commission  did  not  stop  with  this  bare  recommenda- 
tion. It  made  a  careful  study  of  the  budgetary  legislation  of 
the  other  states,  and  upon  this  study  as  a  basis  prepared  a 
draft  of  a  budget  law  which  it  included  in  its  report  and  urged 
for  adoption. 

Fortunately,     the     Governor-elect,     Hon.     Westmoreland 

J  Davis,  was  a  strong  supporter  of  this  demand.    To  no  small 

degree  his  campaign  was  made  on  this  issue.    In  his  platform 

which  was  printed  and  widely  distributed  throughout  the  state 

he  said : 

We  should  scientifically  administer  our  present  State  rev- 
enue rather  than  continually  seek  new  subjects  of  taxation, 
involving  added  burdens  on  our  people.  To  this  end  I  advo- 
cate the  inauguration  of  what  is  known  as  an  "executive 
budget5' — that  is,  an  appropriation  bill  tentatively  prepared  by 
the  Governor  and  submitted  to  the  legislators  at  the  opening 
of  the  session  of  the  General  Assembly. 

The  appropriation  bill  thus  presented  would  be  based  upon 
estimates  furnished  by  heads  of  departments  and  that  of  the 
Auditor  of  Public  Accounts.  It  would  provide  a  survey  of 
the  public  effort  of  the  State,  its  financial  condition,  its  income, 
and  its  proposed  expenditures.  It  would  offer  a  study  for  the 
public  and  for  the  legislature  of  the  working  of  each  depart- 
ment of  the  State,  to  the  end  that  their  operations  may  be 
simplified  and  economy  and  efficiency  assured. 

Of  more  importance  still  would  be  the  centering  of  public 
opinion  upon  proposed  expenditures.  The  discussion  of  the 
press  would  engender  among  our  people  a  healthy  interest  in 
our  State's  finances.  This  tentative  appropriation  bill  would 
be  persuasive,  illuminating,  it  would  not  impinge  upon  the 
constitutional  powers  of  the  legislature. 

Few  of  our  citizens  realize  that  our  State  appropriations  are 
arrived  at  in  the  most  inartificial  fashion;  they  amount  to 
$15,000,000  for  every  two  years.  The  General  Assembly  of 
Virginia  meets  in  biennial  sessions  of  sixty  days;  it  is  over- 
Report  of  the  Commission  on  Economy  and  Efficiency  to  the 
General  Assembly,  January  9,  1918,  p.  26. 


BUDGETARY  LEGISLATION 

whelmed  with  business  during  this  period ;  committees  having 
in  hand  the  appropriation  bill  are  frequently  composed  of  men 
of  limited  experience  in  financial  matters;  they  are  members 
of  many  other  committees,  and  are  expected  to  be  in  regular 
attendance  upon  the  sessions  of  the  legislative  body;  they 
have  brought  to  bear  upon  them  all  the  influence  that  the 
stronger  institutions  can  muster,  while  humbler  endeavor,  such 
as  the  elementary  schools,  are  as  a  rule  without  enthusiastic 
champions.  Legislators  are  called  upon  in  the  last  days  of 
the  session  to  vote  great  sums  of  money  with  little  if  any 
knowledge  of  what  they  are  voting  for,  yet  we  wonder  at  lack 
of  efficiency  in  government  and  submit  to  increased  taxation, 
ofttimes  necessitated  by  waste  and  extravagance. 

The  Governor  of  Virginia,  because  of  high  purpose,  fair- 
mindedness  and  political  fearlessness,  should  have  the  confi- 
dence of  the  public,  and  his  recommendations  in  regard  to  the 
appropriation  bill  would  go  far  to  bring  about  those  adminis- 
trative reforms  necessary  to  economical  and  efficient  public 
service. 

An  executive  budget  simply  applies  to  government  the  prin- 
ciples that  obtain  in  business  successfully  conducted. 

This  he  followed  up  by  the  statement  in  his  inaugural  ad- 
dress, delivered  February  i,  1918,  "I  earnestly  recommend  the 
inauguration  of  what  is  known  as  an  executive  budget.  In 
my  recent  appeal  to  the  electorate  of  Virginia  the  establish- 
ment of  such  a  system,  which  will  place  the  operations  of  our 
state  government  upon  a  businesslike  basis,  was  a  leading 
feature,  and  wherever  I  went  I  found  the  people  cordial  in 
response  to  my  promise  to  urge  the  adoption  of  this  system  in 
Virginia." 

The  result  of  this  strong  support  of  the  movement  by  both 
the  Commission  on  Economy  and  Efficiency  and  the  Gover- 
nor was  that  the  legislature  passed  and  the  Governor  approved, 
on  February  19,   1918,  the  budgetary  bill  prepared  by  the^ 
commission  precisely  as  it  had  been  drafted. 

This  act  thus  placed  on  the  statute  books  must  be  deemed 
to  be  one  of  the  best  budgetary  laws  enacted  by  any  state 
of  the  Union.  It  is  unusually  clearly  worded  so  as  to  leave 

33 


BUDGETARY  REFORM  IN  THE  STATES 

no  doubt  about  its  purpose  to  give  to  the  state  a  thoroughly 
scientific  budgetary  system.  Especially  is  great  care  taken  to 
make  clear  that  the  obligation  of  formulating  and  submit- 
ting the  budget  rests  with  the  Governor;  that  the  function  of 
that  officer  is  not  restricted  to  reviewing  the  estimates  pre- 
pared by  others;  but  that  recommendations  made  by  him 
must  represent  his  own  matured  judgment  after  a  careful 
survey  of  the  financial  needs  of  the  state.  It  is  expressly  pro- 
vided that  before  a  date  named  he  and  his  assistants  "must 
have  completed  a  careful  survey  of  all  the  departments,  bu- 
reaus, divisions,  officers,  boards,  commissions,  institutions  and 
other  agencies  and  undertakings  of  the  state  through  which 
he  shall  be  in  possession  of  the  working  knowledge  upon 
which  to  base  his  recommendations  to  the  General  Assembly." 
It  is  further  provided  that  the  budget  submitted  by  him  shall 
be  "based  on  his  own  conclusions  and  judgment." 

Equal  care  is  taken  to  ensure  that  the  budget  shall  be  in 
proper  form,  and  shall  be  accompanied  by  proper  supporting 
statements  such  as  those  showing  revenues  and  expenditures 
in  the  past,  current  assets  and  liabilities,  an  itemized  and 
complete  balance  sheet,  and  a  general  survey  of  the  state's 
financial  condition  and  resources.  Other  features  are:  the 
ample  provision  for  public  hearings  by  the  Governor  on  all 
estimates  urged  for  inclusion  in  the  budget;  the  requirement 
that  the  Governor  shall  submit  with  his  budget  a  "budget 
bill" ;  that  the  committees  of  the  two  houses  having  in  charge 
the  budget  bill  shall  sit  jointly  in  open  sessions  while  con- 
sidering it,  at  which  sessions  all  interested  parties,  including 
the  Governor  or  his  representative  and  the  Governor-elect, 
shall  have  the  right  to  be  present  and  be  heard;  that  all  bills 
introduced  in  either  house  carrying  appropriations  shall  be 
itemized  in  accordance  with  the  classifications  used  in  the  bud- 
get; and  that  no  bill  carrying  a  special  appropriation  bill  shall 
be  considered  by  either  house  until  the  budget  bill  has  been 
finally  acted  upon  by  both  houses,  except  in  case  of  an  emer- 
gency which  must  be  clearly  set  forth  in  the  bill  itself. 

34 


BUDGETARY  LEGISLATION 

Finally,  provision  is  made  that  the  Governor  shall  have 
the  power  to  employ,  and  fix  the  compensation  and  pay  from 
the  civil  contingent  fund,  such  budget  assistants  and  other 
special  help  as  he  may  require  in  performing  his  budgetary 
duties. 

Following  is  a  copy  of  this  act : 

An  act  to  provide  for  the  preparation  and  review  of  estimates 
for  expenditures  and  revenue,  and  to  establish  a  budget  sys- 
tem for  all  State  departments,  bureaus,  divisions,  officers, 
boards,  commissions,  institutions,  and  other  agencies  and 
undertakings  receiving  or  asking  financial  aid  from  the 
State  of  Virginia.  Approved  February  19,  1918. 

Section  i.  Be  it  enacted  by  the  General  Assembly  of  Vir- 
ginia, That  on  or  before  the  first  day  of  November  biennially 
in  the  odd  numbered  years  each  of  the  several  State  depart- 
ments, bureaus,  divisions,  officers,  commissions,  institutions, 
and  other  agencies  and  undertakings  receiving  or  asking  finan- 
cial aid  from  the  State  of  Virginia  shall  report  to  the  Gov- 
ernor, on  official  estimate  blanks  furnished  for  such  purpose,  an 
estimate  in  itemized  form  showing  the  amount  needed  for  each 
year  of  the  ensuing  biennial  period  beginning  with  the  first  day 
of  March  thereafter.  The  official  estimate  blanks  which  must 
be  used  in  making  these  reports  shall  be  furnished  by  the  Gov- 
ernor, shall  be  uniform  and  shall  clearly  designate  the  kind  of 
information  to  be  given  thereon. 

Sec.  2.  On  or  before  the  first  day  of  December  biennially 
in  the  odd  numbered  years  the  Auditor  of  Public  Accounts 
shall  furnish  to  the  Governor  an  estimate  of  the  financial  needs 
of  the  General  Assembly,  itemized  in  strict  accordance  with  the 
budget  classifications  adopted  by  the  Governor,  and  certified 
and  approved  by  the  presiding  officer  of  each  House,  for  each 
year  of  the  ensuing  biennial  period  beginning  with  the  first 
day  of  March  thereafter ;  and  an  estimate  of  the  financial  needs 
of  the  Judiciary,  as  provided  by  law,  itemized  in  strict  accord- 
ance with  the  Budget  classifications  adopted  by  the  Governor, 
for  each  year  of  the  ensuing  biennial  period  beginning  with  the 
first  day  of  March  thereafter. 

The  Auditor  of  Public  Accounts  shall  transmit  to  the  Gov- 
ernor with  these  estimates  full  and  detailed  explanations  of  all 
increases  or  decreases.  These  estimates,  together  with  the  ac- 

35 


BUDGETARY  REFORM  IN  THE  STATES 

company  ing  explanations  of  increases  and  decreases,  shall  be  • 
included  in  the  Budget,  without  revision,  by  the  Governor. 

Sec.  3.  On  or  before  the  first  day  of  November  bienni- 
ally in  the  odd  numbered  years  the  Auditor  of  Public  Accounts 
shall  furnish  to  the  Governor  the  following  statements  classi- 
fied and  itemized  in  strict  accordance  with  the  Budget  classi- 
fications adopted  by  the  Governor : 

(1)  A  statement   showing  the  balance   standing  to   the 
credit  of  the  several  appropriations  for  each  department,  bu- 
reau, division,  officer,  board,  commission,  institution,  or  other 
agency  or  undertaking  of  the  State  at  the  end  of  the  last  pre- 
ceding appropriation  year. 

(2)  A  statement  showing  the  monthly  expenditures  and 
revenues    from    each   appropriation    account,    and   the   total 
monthly  expenditures  and  revenues  from  all  the  appropria- 
tion accounts,  including  special  and  all  other  appropriations, 
in  the  twelve  months  of  the  last  preceding  appropriation  year. 

(3)  A  statement  showing  the  annual  expenditures  in  each 
appropriation  account,  and  the  revenues  from  all  sources,  in- 
cluding expenditures  and  revenues  from  special  and  all  other 
appropriations,  for  each  year  of  the  last  two  appropriation 
years,  with  a  separate  column  showing  the  increase  or  decrease 
for  each  item. 

(4)  An  itemized  and  complete  financial  balance  sheet  for 
the  State  at  the  close  of  the  last  preceding  fiscal  year  ending 
September  thirtieth. 

(5)  Such  other  statements  as  the  Governor  shall  request. 
Sec.  4.     The    departments,    bureaus,     divisions,     officers, 

boards,  commissions,  institutions,  or  other  agencies  or  under- 
takings of  the  State,  upon  request,  shall  immediately  furnish 
to  the  Governor,  in  such  form  as  he  may  require,  any  informa- 
tion desired  by  him  in  relation  to  their  respective  affairs  or  ac- 
tivities. 

Sec.  5.  The  Governor  shall  provide  for  public  hearings 
on  any  and  all  estimates  to  be  included  in  the  Budget,  which 
shall  be  held  during  the  month  of  November  biennially  in  the 
odd  numbered  years.  The  Governor  shall  require  the  attend- 
ance at  these  hearings  of  the  heads  or  responsible  representa- 
tives of  all  State  departments,  bureaus,  divisions,  officers, 
boards,  commissions,  institutions,  or  other  agencies  or  under- 
takings receiving  or  asking  financial  aid  from  the  State. 

Sec.  6.     On  or  before  the  first  day  of  December  biennially 

36 


BUDGETARY  LEGISLATION 

in  the  odd  numbered  years  the  Governor  and  his  assistants 
must  have  completed  a  careful  survey  of  all  the  departments, 
bureaus,  divisions,  officers,  boards,  commissions,  institutions, 
and  other  agencies  and  undertakings  of  the  State  through 
which  he  shall  be  in  possession  of  the  working  knowledge  upon 
which  to  base  his  recommendations  to  the  General  Assembly. 

Sec.  7.  Within  five  days  after  the  beginning  of  each  reg- 
ular session  of  the  General  Assembly,  the  Governor  shall  sub- 
mit to  the  presiding  officer  of  each  House  printed  copies  of  a 
budget,  based  on  his  own  conclusions  and  judgment,  containing 
a  complete  and  itemized  plan  of  all  proposed  expenditures  for 
each  State  department,  bureau,  division,  officer,  board,  com* 
mission,  institution,  or  other  agency  or  undertaking,  classified 
by  function,  character  and  object,  and  of  estimated  revenues 
and  borrowings,  for  each  year  in  the  ensuing  biennial  period 
beginning  with  the  first  day  of  March  thereafter.  Opposite 
each  item  of  the  proposed  expenditures  the  budget  shall  show 
in  separate  parallel  columns  the  amount  appropriated  for  the 
last  preceding  appropriation  year,  for  the  current  appropria- 
tion year,  and  the  increase  or  decease. 

The  Governor  shall  accompany  the  budget  with : 

(1)  A  statement  of  the  revenues  and  expenditures   for 
each  of  the  two  appropriation  years  next  preceding,  classified 
and  itemized  in  accordance  with  the  official  budget  classifica- 
tions adopted  by  the  Governor. 

(2)  A  statement  of  the  current  assets,  liabilities,  reserves 
and  surplus  or  deficit  of  the  State. 

(3)  A  statement  of  the  debts  and  funds  of  the  State. 

(4)  A  statement  showing  the  Governor's  itemized  esti- 
mates of  the  condition  of  the  State  treasury  as  of  the  begin- 
ning and  end  of  each  of  the  next  two  appropriation  years. 

(5)  An  itemized  and  complete  financial  balance  sheet  for 
the  State  at  the  close  of  the  last  preceding  fiscal  year  ending 
September  thirtieth. 

(6)  A  general  survey  of  the  State's  financial  and  natural 
resources,  with  a  review  of  the  general  economic,  industrial 
and  commercial  condition  of  the  Commonwealth. 

Sec.  8.  The  Governor  also  shall  submit  to  the  presiding 
officer  of  each  House  of  the  General  Assembly,  at  the  same 
time  he  submits  his  budget,  copies  of  a  tentative  bill  for  all 
proposed  appropriations  of  the  budget,  clearly  itemized  and 
properly  classified,  for  each  year  in  the  ensuing  biennial  ap- 


BUDGETARY  REFORM  IN  THE  STATES 

propriation  period,  which  shall  be  known  as  "The  Budget 
Bill." 

Sec.  9.  The  standing  committees  of  the  House  of  Dele- 
gates and  of  the  Senate  being  in  charge  of  appropriation 
measures  shall  sit  jointly  in  open  sessions  while  considering 
the  budget,  and  shall  begin  such  joint  meetings  within  five  days 
after  the  budget  has  been  submitted  to  the  General  Assembly 
by  the  Governor.  This  joint  committee  may  cause  the  attend- 
ance of  heads  or  responsible  representatives  of  the  depart- 
ments, institutions  and  all  other  agencies  of  the  State  to  fur- 
nish such  information  and  answer  such  questions  as  the  joint 
committee  shall  require,  and  to  these  sessions  shall  be  ad- 
mitted, with  the  right  to  be  heard,  all  persons  interested  in  the 
estimates  under  consideration.  The  Governor,  or  his  represen- 
tative, and  the  Governor-elect,  shall  have  the  right  to  sit  at 
these  public  hearings  and  be  heard  on  all  matters  coming  be- 
fore the  joint  committee. 

Sec.  10.  The  General  Assembly  may  increase  or  decrease 
items  in  the  budget  bill  as  it  may  deem  to  be  in  the  interests  of 
greater  economy  and  efficiency  in  the  public  service,  but 
neither  House  shall  consider  further  or  special  appropriations, 
except  in  case  of  an  emergency,  which  fact  shall  be  clearly 
stated  in  the  bill  therefor,  until  the  budget  bill  shall  have  been 
finally  acted  upon  by  both  Houses.  All  bills  introduced  in 
either  House  carrying  appropriations  shall  be  itemized  in  ac- 
cordance with  the  classifications  used  in  the  budget. 

Sec.  ii.  The  Governor  shall  be  the  chief  budget  officer  of 
the  State,  and  shall  employ  competent  budget  assistants  and 
such  special  help  as  he  may  require  to  carry  out  the  provisions 
of  this  act.  The  Governor  shall  fix  the  compensation  of  such 
persons  as  he  shall  employ  in  this  connection  and  cause  the 
same,  together  with  their  necessary  traveling  expenses,  to  be 
paid  out  of  the  civil  contingent  fund. 

Sec.  12.  Any  and  all  acts  or  parts  of  acts  inconsistent  with 
the  provisions  of  this  Act  are  hereby  repealed. 


\/  Delaware.  On  March  15,  1917,  Delaware  passed  an  act 
making  careful  provision  for  introduction  of  a  budgetary 
system.  The  duty  of  preparing  and  submitting  the  budget 
is  imposed  upon  the  Governor.  He  is  directed  to  submit  a 
separate  budget  for  each  of  the  two  years  to  be  financed  by 

38 


BUDGETARY  LEGISLATION 

the  biennial  general  assembly  and  to  support  these  budgets  by 
statements  showing: 

(i)  The  revenues  and  expenditures  of  each  of  the  two 
fiscal  years  next  preceding;  (2)  The  current  amounts,  liabili- 
ties, reserves  and  surplus  or  deficit  of  the  State;  (3)  The  debts 
and  funds  of  the  State;  (4)  An  estimate  of  the  State's  finan- 
cial condition  as  to  the  beginning  and  end  of  each  of  the  fiscal 
years  covered  by  the  two  budgets  above  provided;  (5)  Any 
explanation  the  Governor  may  desire  to  make  as  to  the  im- 
provement features  of  any  budget  and  any  suggestions  as  to 
methods  for  the  reduction  or  increase  of  the  State's  revenue. 

An  interesting  feature  of  the  act  is  the  provision  for  the 
careful  classification  of  estimates  of  expenditures.  These  esti- 
mates, it  is  provided,  shall  be  first  classified  under  the  two 
heads  of :  ( i )  ''Government  Appropriations,"  or  those  which 
have  to  do  with  the  running  of  the  government  proper,  and 
(2)  "All  Other  Estimates  of  Appropriations." 

The  first  class,  it  is  further  provided,  shall  be  subclassified 
under  the  following  seven  heads: 

(i)  For  the  General  Assembly  as  certified  to  the  Gov- 
ernor in  the  manner  hereinafter  provided;  (2)  For  the  Ex- 
ecutive Department;  (3)  For  the  Judiciary  Department;  (4) 
To  pay  and  discharge  the  principal  and  interest  of  the  debt 
of  the  State  of  Delaware,  if  any;  (5)  For  all  salaries  payable 
by  the  State;  (6)  For  the  establishment  and  maintenance  of 
free  public  schools  of  the  State;  (7)  For  any  other  expenses 
of  the  State  necessary  under  the  constitution. 

In  another  section  it  is  provided  that  "the  estimate  for  the 
public  schools  shall  be  furnished  by  the  State  Board  of  Educa- 
tion and  shall  be  included  in  the  budget  without  revision." 
Over  this  estimate  and  that  for  the  legislature  the  Governor 
is  thus  given  no  power  of  revision.  In  respect  to  all  the 
other  estimates  the  Governor  is  expected  to  make  the  sums 
requested  represent  his  opinion  as  to  the  sums  that  should  be 
granted.  With  the  two  exceptions  noted  it  will  thus  be  seen 

39 


BUDGETARY  REFORM  IN  THE  STATES 

that  provision  is  made  for  a  true  executively  formulated  bud- 
get. 

In  respect  to  the  classification  of  the  estimates  it  is  diffi- 
cult to  see  why  provision  should  be  made  for  a  consolidated 
statement  of  estimates  for  all  salaries  in  one  place.  It  is  quite 
proper  that  estimates  for  salaries  should  be  separately  shown 
but  it  would  seem  to  be  preferable  that  the  salary  schedules 
should  be  shown  with  and  made  an  integral  part  of  the  esti- 
mate for  each  branch  or  service  of  the  government. 

The  act  contains  further  interesting  provisions  regarding  the 
procedure  to  be  followed  by  the  legislature  in  acting  upon 
the  budget.  It  is  thus  provided  that  the  Governor  shall  draft 
an  appropriation  bill  corresponding  to  the  budget  which  the 
presiding  officer  of  each  house  shall  cause  to  be  introduced 
and  which  shall  be  known  as  "The  Budget  Bill";  that  con- 
sideration of  this  bill  shall  have  priority  over  all  other  bills 
or  motions  except  the  motion  to  adjourn;  that  the  Governor 
and  other  officers  of  departments,  boards,  etc.,  for  which  funds 
are  requested,  shall  have  the  right  to  be  heard  in  respect  to 
their  requests ;  that  neither  house  shall  consider  any  other  ap- 
propriation until  the  Budget  Bill  has  been  finally  acted  upon 
by  both  houses;  that  every  such  other  appropriation  request 
"shall  be  embodied  in  a  separate  bill,  limited  to  some  single 
work,  object  or  purpose  therein  stated,"  shall  be  known  as  a 
supplemental  appropriation  bill  and  shall  "by  its  provisions 
provide  or  designate  the  sources  from  which  the  money  there- 
in appropriated  is  to  be  derived." 

As  bearing  directly  upon  this  latter  provision,  it  is  further 
provided  that  "The  Governor  shall  include  in  his  Budget, 
under  the  title  'General  Appropriations'  an  estimate  of  the 
amounts  which  can  be  appropriated  under  miscellaneous  ap- 
propriations necessary  for  the  welfare  of  the  State  and  a 
number  of  bills  carrying  sufficient  appropriations  may  be 
passed  to  exhaust  the  miscellaneous  fund  so  estimated,  with- 
out providing  any  other  source  or  revenue  than  the  miscella- 

4Q 


BUDGETARY  LEGISLATION 

neous  fund  so  as  aforesaid  estimated  by  the  Governor  to  be 
available." 

It  will  be  seen  that  this  act  follows  in  many  respects  the 
budget  amendment  of  Maryland.  As  in  the  case  of  that 
amendment,  the  most  important  feature  of  budgetary  reform 
that  is  not  covered  is  that  of  making  adequate  provision  for 
a  special  budgetary  organ  to  serve  as  the  agency  through 
which  the  Governor  may  keep  in  close  current  touch  with  the 
organization,  activities,  methods  of  business  and  needs  of  the 
several  services,  and  to  assist  him  in  the  actual  work  of 
framing  the  budget. 

Following  is  a  reproduction  in  full  of  this  important  Joint 
Resolution : 

House  Joint  Resolution  providing  for  the  budget  system  in 
appropriations  by  the  present  General  Assembly.  Ap- 
proved  March  15,  1917.  (Acts  of  1917,  Chapter  278.) 

WHEREAS  it  has  been  the  custom  in  this  State  for  each 
General  Assembly  to  appropriate  large  sums  of  money  without 
regard  to  the  condition  of  the  State  Treasury;  and 

WHEREAS  this  system  has  resulted  in  much  confusion  and 
embarrassment  to  the  different  departments  of  the  State  Gov- 
ernment; and 

WHEREAS  it  is  the  universal  desire  that  the  General  As- 
sembly shall  first  provide  for  the  necessary  expenses  of  the 
State  Government  for  the  two  ensuing  fiscal  years ; 

Therefore  be  it  resolved  by  the  Senate  and  House  of  Rep- 
resentatives of  the  State  of  Delaware  in  General  Assembly: 

Section  i.  That  the  Governor  shall  be  requested  to  submit 
to  the  General  Assembly  two  budgets,  one  for  each  of  the  en- 
suing fiscal  years.  Each  budget  shall  contain  a  complete  plan 
of  proposed  expenditures  and  estimated  revenues  for  the  fiscal 
year  to  which  it  relates,  and  shall  show  the  estimated  surplus 
or  deficit  of  revenues  at  the  end  of  such  year.  Accompanying 
each  budget  shall  be  a  statement  showing  (i)  The  revenues 
and  expenditures  of  each  of  the  two  fiscal  years  next  preced- 
ing; (2)  The  current  assets,  liabilities,  reserves  and  surplus 
or  deficit  of  the  State;  (3)  The  debts  and  funds  of  the  State; 
(4)  An  estimate  of  the  State's  financial  condition  as  to  the 
beginning  and  end  of  each  of  the  fiscal  years  covered  by  the 

41 


BUDGETARY  REFORM  IN  THE  STATES 

two  budgets  above  provided;  (5)  Any  explanation  the  Gov- 
ernor may  desire  to  make  as  to  the  improvement  features  of 
any  budget  and  any  suggestion  as  to  methods  for  the  reduction 
or  increase  of  the  State's  revenue. 

Sec.  2.  Each  budget  shall  be  divided  into  two  parts,  and 
the  first  part  shall  be  designated  "Governmental  Appropri- 
ations" and  shall  embrace  an  itemized  estimate  of  the  appro- 
priations :  ( i )  For  the  General  Assembly  as  certified  to  the 
Governor  in  the  manner  hereinafter  provided;  (2)  For  the 
Executive  Department;  (3)  For  the  Judiciary  Department; 
(4)  To  pay  and  discharge  the  principal  and  interest  of  the  debt 
of  the  State  of  Delaware,  if  any;  (5)  For  all  salaries  payable 
by  the  State;  (6)  For  the  establishment  and  maintenance  of 
free  public  schools  of  the  State;  (7)  For  any  other  expenses 
of  the  State  necessary  under  the  Constitution. 

Sec.  3.  The  second  part  shall  be  designated  "General  Ap- 
propriations" and  shall  include  all  other  estimates  of  appro- 
priations. The  Governor  shall  deliver  to  the  presiding  Officer 
of  each  House  the  budgets,  and  a  copy  of  a  bill  for  all  the 
proposed  appropriations  of  the  budget,  clearly  itemized  and 
classified,  and  the  Presiding  Officer  of  each  House  shall 
promptly  cause  such  bill  to  be  introduced  therein,  and  such  bill 
shall  be  known  as  "The  Budget  Bill."  The  Budget  Bill  shall 
have  priority  over  all  other  bills  or  motions,  except  the  mo- 
tion to  adjourn.  The  Governor  may,  before  final  action  there- 
on by  the  General  Assembly,  amend  or  supplement  either  of 
said  budgets,  to  correct  an  oversight,  or  in  case  of  an  emer- 
gency, with  the  consent  of  the  General  Assembly,  by  delivering 
such  an  amendment  or  supplement  to  the  Presiding  Officers  of 
both  Houses ;  said  amendment  or  supplement  shall  thereby  be- 
come a  part  of  said  Budget  Bill  as  an  addition  to  the  items  of 
said  Bill,  or  as  a  modification  or  substitution  for  any  item  of 
said  bill,  such  amendment  or  supplement  may  affect.  The  Gen- 
eral Assembly  may  amend  the  bill  by  increasing  or  diminishing 
the  items  therein,  in  any  way  that  is  not  contrary  to  the  Con- 
stitution of  the  State  of  Delaware. 

Sec.  4.  The  Governor  and  such  representatives  of  the  Ex- 
ecutive Department  and  of  other  departments,  Boards,  Offi- 
cers and  Commissions  of  the  State,  expending  or  applying  for 
State's  moneys,  shall  have  the  right  to  be  heard  with  respect 
to  any  budget  bill,  during  the  construction  thereof,  and  to 
answer  inquiries  relative  thereto. 

42 


BUDGETARY  LEGISLATION 

Sec.  5.  Neither  House  shall  consider  other  appropriations 
until  the  Budget  Bill  has  been  finally  acted  upon  by  both 
Houses,  and  no  such  other  appropriations  shall  be  passed  by 
either  House,  except  in  accordance  with  the  provisions  follow- 
ing: 

( i )  Every  such  appropriation  shall  be  embodied  in  a  sep- 
arate bill,  limited  to  some  single  work,  object  or  purpose  there- 
in stated,  and  called  herein  a  supplementary  appropriation  bill. 
Each  supplementary  appropriation  bill  shall,  by  its  provisions, 
provide  or  designate  the  source  from  which  the  money  there- 
in appropriated  is  to  be  derived. 

Sec.  6.  The  Governor,  for  the  purpose  of  making  up  his 
budgets,  may  require  from  the  proper  State  Officials,  includ- 
ing herein  all  Departments,  both  Executive  and  Administra- 
tive, all  Boards,  Commissions  and  Agencies,  expending  or 
supervising  the  expenditure  of,  and  all  institutions  applying 
for  State  moneys  and  appropriations,  such  itemized  estimates 
and  other  information,  in  such  form  and  at  such  times,  as  he 
shall  desire.  The  estimates  for  the  Legislative  Department 
shall  be  certified  by  the  presiding  Officer  of  each  House,  and 
shall  be  included  in  the  budget  without  revision.  The  estimate 
for  the  public  school  shall  be  furnished  by  the  State  Board  of 
Education  and  shall  be  included  in  the  budgets  without  re- 
vision. 

Sec.  7.  The  Governor  shall  include  in  his  budget,  under  the 
title  "General  Appropriations"  an  estimate  of  the  amounts 
which  can  be  appropriated  under  miscellaneous  appropriations, 
necessary  for  the  welfare  of  the  State,  and  a  number  of  bills 
carrying  sufficient  appropriation  may  be  passed  to  exhaust  the 
miscellaneous  fund  so  estimated,  without  providing  any  other 
source  or  revenue  than  the  miscellaneous  fund  so  as  aforesaid 
estimated  by  the  Governor  to  be  available. 


CHAPTER  IV 

BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL 
STATES:  ILLINOIS,  IOWA,  KANSAS,  MINNE- 
SOTA, NEBRASKA,  NEW  JERSEY,  OHIO 

Illinois.  In  Illinois  substantial  progress  has  been  made 
during  recent  years  in  the  direction  of  budgetary  reform. 
This  movement  may  be  said  to  date  from  1913,  when,  for  the 
first  time,  the  attempt  was  made  to  compile  in  a  single  docu- 
ment all  requests  for  appropriations.  Conditions  existing 
prior  to  the  inauguration  of  this  movement  as  regards  all 
phases  of  the  problem — administrative  organization,  the  prep- 
aration and  submission  of  estimates  of  revenues  and  expendi- 
tures and  action  upon  such  estimates  by  the  legislature — 
could  scarcely  have  been  worse. 

Over  the  officers,  boards,  and  commissions  created  by  stat- 
ute the  General  Assembly  has  full  authority.  In  practice,  in 
the  confusion  of  legislative  sessions,  new  boards  and  offices 
have  usually  been  created  with  little  reference  to  previously 
existing  authorities,  either  as  to  form  of  organization  or  to  the 
scope  of  their  powers.  Most  of  them  are  substantially  inde- 
pendent of  each  other,  and  are  subject  to  no  control,  except 
the  nominal  supervision  of  the  Governor,  through  his  powers 
of  appointment  and  removal.  The  constitutional  officers  and 
some  of  those  created  by  statute  are  not  even  subject  to  this 
nominal  supervision.  As  a  result  of  these  conditions  the  ex- 
ecutive authorities  of  the  State  lack  any  semblance  of  sys- 
tematic organization.1 

Though  the  constitution  of  Illinois  provides  that  the  Gov- 
ernor shall,  at  each  session  of  the  legislature  present  "esti- 

^f  Report  of  Efficiency  and  Economy  Committee,  Illinois,  1915,  p.  1 1. 

44 


BUDGETARY  LEGISLATION 

mates  of  the  amount  of  money  required  to  be  raised  by  taxa- 
tion for  all  purposes"  no  Governor  appears  to  have  ever  com- 
plied with  this  provision.1 

Requests  for  appropriations  were  submitted  informally  by 
each  office,  department  or  board ;  and  separate  bills  were  pre- 
pared by  the  several  departments  and  institutions,  and  intro- 
duced by  individual  members  of  the  General  Assembly.2 

As  a  result,  instead  of  a  carefully  prepared  budget,  there 
are  passed  a  large  number  of  separate  appropriation  acts,  with 
an  absurd  range  of  variation  in  the  amounts  appropriated  and 
the  extent  and  character  of  the  items.  Thus  at  the  session  of 
1913,  there  were  passed  94  appropriation  acts,  which  cover  1 16 
pages  in  the  volume  of  session  laws,  one  act  for  the  pay  of 
members  of  the  General  Assembly  was  for  a  lump  sum  of 
$2,600,000 — the  amounts  payable  to  each  person  being  regu- 
lated by  statutory  provisions.  Appropriations  for  the  state 
university  ($4,500,000)  arid  for  the  ordinary  expenses  of  the 
state  charitable  institutions  ($8,000,000)  were  made  in  a  few 
large  items.  On  the  other  hand,  appropriations  for  buildings 
and  improvements  in  the  charitable  institutions  were  specified 
in  1 3 1  items ;  appropriations  for  the  five  normal  schools  were 
in  one  act,  with  33  items ;  appropriations  for  the  penitentiaries 
and  reformatory  were  in  five  separate  acts ;  and  the  "omnibus 
bill"  for  the  great  number  of  state  offices,  boards  and  com- 
missions was  in  96  paragraphs,  with  more  than  a  thousand 
items.  For  one  office  there  were  such  small  items  as  $75  a 
year  for  rubber  stamps,  and  $75  a  year  for  twine."  3 

A  partial  attempt  to  improve  this  condition  of  affairs  both 
from  the  administrative  and  budgetary  standpoint  was  made  s/ 
in  1909  when  all  the  state  charitable  institutions  were  placed 
under  the  general  direction  of  a  single  state  board  of  adminis- 
tration.   This  board,  Prof.  Fairlie  states,  has  presented  care-*N/ 
fully  prepared  estimates,  which  has  put  an  end  to  the  scramble 
before  the  legislature  for  funds  by  the  several  institutions, 

1  John  A.  Fairlie;  Budget  Methods  in  Illinois,  Annals  of  the  Amer-'Qr 
ican  Academy  of  Political  and  Social  Science,  Nov.  1915,  p.  86. 

2  Ibid.,  p.  86. 

3  Ibid.,  p.  87. 

45 


BUDGETARY  REFORM  IN  THE  STATES 

the  estimates  of  the  board  being  generally  accepted  by  the  leg- 
islature. 

The  first  attempt  to  bring  together  in  one  showing  all  re- 
quests for  appropriations  was,  however,  made  in  1913.  In 
that  year  a  detailed  compilation  of  all  such  requests  together 
with  a  comparison  of  appropriations  made  two  years  before 
was  laid  before  the  general  assembly.  In  the  same  year  an 
act  was  passed  providing  that  the  State  Legislative  Reference 
Bureau  should  prepare  and  lay  before  the  legislature  at  each 
of  its  sessions  a  similar  compilation  with  the  data  arranged  ac- 
cording to  a  general  scheme  of  classification. 

Regarding  the  results  of  this  provision,  Prof.  Fairlie  says : 

This  work  seems  to  have  been  carefully  done  and  marks  an 
important  step  towards  a  budget  system.  But  it  must  be  rec- 
ognized that  this  fell  far  short  of  an  adequate  system.  Neces- 
sarily the  new  classification  made  impossible  in  most  cases  a 
detailed  comparison  with  previous  appropriations ;  nor  had  the 
bureau  been  authorized  to  make  an  analysis  of  expenditures 
under  the  new  classification,  as  a  basis  of  comparison.  To  the 
writer  the  mass  of  detailed  items  has  seemed  too  numerous, 
and  more  likely  to  bewilder  than  to  enlighten  the  members  of 
the  appropriation  committees.  But  the  most  serious  weak- 
ness of  this  undertaking  was  the  lack  of  any  responsible  rec- 
ommendations for  the  estimates  as  a  whole.  The  Bureau  had 
no  authority  to  make  recommendations.1 

Regarding  the  first  attempt  in  the  direction  of  a  budget  the 
following  comment  was  made  by  the  pamphlet  on  State  Bud- 
get Systems  prepared  for  the  Massachusetts  State  Constitu- 
tional Convention.2 

The  first  budget  which  was  prepared  was  a  mass  of  detailed 
items  not  very  carefully  classified  and  more  likely  to  bewilder 
than  to  enlighten  the  appropriation  committees.  The  experi- 
ence of  Illinois  would  indicate,  therefore,  that  it  is  unwise 
to  confer  the  function  of  preparing  the  budget  upon  a  bureau 

1  Fairlie :  Budget  Methods  in  Illinois,  Annals,  etc.,  p.  88. 

a  Bulletin  No.  2,  State  Budget  Systems  in  the  United  States,  p.  23. 

46 


BUDGETARY  LEGISLATION 

which  is  poorly  equipped,  which  does  not  make  recommenda- 
tions and  which  assumes  no  definite  responsibility  for  the 
budget. 

The  compilation  of  appropriation  requests  in  this  way, 
moreover,  led  to  little  or  no  improvement  in  the  preparation 
of  appropriation  bills.  On  the  contrary  it  seems  to  have 
promoted  the  practice  of  itemizing  appropriations  in  still  great- 
er detail.  "There  were,"  Prof.  Fairlie  writes,  "as  formerly 
too  many  separate  bills,  and  no  approach  to  a  uniform  system 
of  classifying  items,  while  the  detailed  enumeration  of  petty 
items  was  extended."  l  The  fundamental  principle  that,  while 
a  budget  should  give  expenditures  in  the  greatest  practicable 
detail,  appropriations  should  be  made  under  more  general 
heads,  received  no  recognition  and  in  all  probability  was  not 
appreciated  at  all. 

The  next  step  in  the  promotion  of  budgetary  reform  was 
that  of  the  creation  in  1913,  by  the  same  general  assembly,  as 
provided  for  the  compiling  of  estimates  by  the  State  Legisla- 
tive Reference  Bureau,  of  a  joint  committee  of  the  two 
houses — 

to  investigate  all  departments  of  the  state  government  includ- 
ing all  boards,  bureaus  and  commissions  which  have  been  cre- 
ated by  the  General  Assembly,  such  investigations  to  be  made 
with  a  view  of  securing  a  more  perfect  system  of  accounting, 
combining  and  centralizing  the  duties  of  the  various  depart- 
ments, abolishing  such  as  are  useless  and  securing  for  the  state 
of  Illinois  such  reorganization  that  will  promote  greater  effi- 
ciency and  greater  economy  in  her  various  branches  of  gov- 
ernment.2 

Full  powers  to  take  testimony,  to  demand  the  production 
of  records  and  papers  and  to  employ  experts  and  other  assist- 
ance were  conferred  upon  the  committees  and  an  item  was 

1  Fairlie :  Budget  Methods  in  Illinois,  Annals,  etc.,  p.  89. 

2  Senate  Joint  Resolution  No.  22.     Forty-eighth  Gen.  Assembly, 

47 


BUDGETARY  REFORM  IN  THE  STATES 

inserted  in  an  appropriation  bill  to  meet  the  expenses  incurred. 

Though  the  task  of  devising  a  proper  budgetary  system 
for  the  state  was  not  specifically  conferred  upon  this  com- 
mittee, the  duties  entrusted  to  it  were  ones  constituting  es- 
sential features  of  the  elaboration  of  such  a  system;  those 
naively  of  effecting  a  ..reorganization  of  £he  administrative 
branch  of  the  government  and«of  devising  a  proper  accounting 
system.  *  " 

The  report  of  this  committee,  submitted  in  1915,  is  an  ex- 
ceptionally able  document.  In  addition  to  containing  the  re- 
port proper  of  the  committee,  it  includes  twelve  special  reports 
on  particular  topics  prepared  by  specialists  appointed  for  the 
purpose  and  performing  their  work  under  the  general  direction 
of  Prof.  John  A.  Fairlie,  Professor  of  Political  Science  at 
the  University  of  Illinois.  Two  of  these  reports;  those  on 
Revenue  and^  Finance  Administration,  by  Prof.  Fairlie  him-, 
self,  and  The  Accounts  of  the  State  of  Illinois,  by  George  E. 
Frazer,  Certified  Public  Accountant  and  Comptroller  of  the 
University  of  Illinois,  deal  directly  with  budgetary  matters. 

The  report  as  a  whole  was  a  convincing  indictment  of  ex- 
isting conditions  from  almost  every  standpoint  of  administra- 
tion, and  pointed  out  the  several  steps  that  should  be  taken  to 
relieve  these  conditions.  Among  these  steps  it  rightly  gave 
first  place  to  the  necessity  that  the  state  should  be  given 
an  integrated  administrative  system  with  the  Governor  at  the 
head.  This  it  pointed  out  would  pave  the  way  for  the  intro- 
duction of  a  budget. 

The  proposed  reorganization  will  also  aid  in  the  prepara- 
tion of  a  proper  budget  of  estimates  as  a  basis  for  appropria- 
tions. Each  department  will  be  able  to  formulate  a  careful 
estimate  of  needed  appropriations,  considering  the  relative  de- 
mands of  its  several  bureaus  and  services;  and  these  depart- 
mental estimates  will  be  compiled  and  analyzed  by  the  State 
Comptroller  for  submission  to  the  Governor,  who  will  recom- 
mend the  aggregate  budget  of  items  approved  by  him  to  the 
General  Assembly.  This  will  place  on  the  Governor  the  re- 
sponsibility for  the  total  amount  requested,  and  the  General 

48 


BUDGETARY  LEGISLATION 

Assembly  will  hesitate  to  increase  the  appropriations  beyond 
the  amounts  recommended  by  the  Governor.1 

The  committee  also  appreciated  the  fact  that  a  budget  must 
have  back  of  it  a  proper  accounting  system.  It  said : 

A  comprehensive  and  modern  system  of  accounts  (such  as 
is  submitted  in  outline  and  which  has  been  worked  out  in  detail 
for  the  penitentiaries  and  reformatory)  will  also  aid  in  con- 
trolling and  fixing  responsibility  for  expenditures  and  in  pre- 
paring close  estimates  for  the  budget.2 

Regarding  the  imperative  need  for  a  budget  in  order  to  se- 
cure good  government  the  committee  said : 

One  of  the  most  serious  defects  arising  from  the  lack  of 
correlation  and  effective  supervision  over  the  subordinate  au- 
thorities is  the  absence  of  any  satisfactory  budget  of  estimates 
as  a  basis  for  appropriations  *  *  *  the  careful  prepara- 
tion of  such  a  budget  would  be  a  potent  factor  in  securing 
economy  and  efficiency  throughout  the  executive  departments. 

These  far-reaching  recommendations  of  the  committee  were 
accepted  and  acted  upon  by  the  next  general  assembly.  By 
an  act  approved  March  7,  1917,  entitled  "An  Act  in  relation 
to  the  Civil  Administration  of  the  State  Government,"  provi- 
sion was  made  for  a  thorough  reorganization  of  the  adminis- 
trative branch  of  the  government  along  the  lines  recommended 
by  the  committee  and  the  adoption  of  many  of  the  other  rec- 
ommendations of  that  body.  Specific  provision  was  not  only 
made  for  the  adoption  of  a  budgetary  system,  but  a  strong 
budgetary  organ  was  created  for  its  administration.  We  have 
no  hesitation  in  saying  that  the  provisions  of  the  act  regard- 
ing the  powers  and  duties  of  this  organ,  which  is  known  as 
the  Department  of  Finance,  in  respect  to  the  preparation  and 
presentation  of  a  budget  and  collateral  matters,  represent  the 

Report  of  the  Efficiency  and  Economy  Committee,  Illinois,  p.  75. 
3  Ibid.,  p.  75. 

49 


BUDGETARY  REFORM  IN  THE  STATES 

furthest  advance  that  has  yet  been  made  by  any  government, 
in  the  United  States  towards  the  adoption  of  a  budgetary 
system.     It  is  indeed  a  misnomer  to  designate  them  as  an 
advance :  they  represent  the  definite  adoption  of  the  budgetary 
system  in  the  most  essential  aspects.    They  are  as  follows : 

An  Act  in  relation  to  the  civil  administration  of  the  State  gov- 
ernment. Approved,  March  7,  1917.  (Acts  of  1917, 
p.  2.) 

Section  36.     The  Department  of  Finance  shall  have  power : 

1.  To  prescribe  and  require  the  installation  of  a  uniform 
system  of  bookkeeping,  accounting  and  reporting  for  the  sev- 
eral departments ; 

2.  To  prescribe  forms  for  accounts  and  financial  reports 
and  statements  for  the  several  departments ; 

3.  To  supervise  and  examine  the  accounts  and  expendi- 
tures of  the  several  departments ; 

4.  To  examine,  at  any  and  all  times,  into  the  accuracy  and 
legality  of  the  accounts,  receipts  and  expenditures  of  the  pub- 
lic moneys  and  the  disposition  and  use  of  the  public  property 
by  the  several  departments ; 

5.  To  keep  such  summary  and  controlling-  accounts  as  may 
be  necessary  to  determine  the  accuracy  of  the  detail  accounts 
and  reports  from  the  several  departments,  and  to  prescribe  the 
manner  and  method  of  certifying  that  funds  are  available  and 
adequate  to  meet  all  contracts  and  obligations ; 

6.  To  prescribe  uniform  rules  governing  specifications  for 
purchases  of  supplies,  the  advertisement   for  proposals,  the 
opening  of  bids  and  the  making  of  awards,  to  keep  a  catalogue 
of  prices  current  and  to  analyze  and  tabulate  prices  paid  and 
quantities  purchased ; 

7.  To  examine,  at  any  and  all  times,  the  accounts  of  every 
private  corporation,  institution,  association  or  board  receiving 
appropriations  from  the  General  Assembly; 

8.  To  report  to  the  Attorney  General  for  such  action,  civil 
or  criminal,  as  the  Attorney  General  may  deem  necessary,  all 
facts  showing  illegal  expenditures  of  the  public  money  or  mis- 
appropriation of  the  public  property ; 

9.  To  examine  and  approve,  or  disapprove,  vouchers,  bills 
and  claims  of  the  several  departments,  and  such  as  are  by  law 
made  subject  to  the  approval  of  the  Governor  and  referred  to 

50 


BUDGETARY  LEGISLATION 

it  by  the  Governor,  and  no  voucher,  bill  or  claim  of  any  depart- 
ment shall  be  allowed  without  its  approval  and  certificate; 

10.  To  prescribe  the  form  of  receipt,  voucher,  bill  or  claim 
to  be  filed  by  the  several  departments  with  it  ; 

11.  In  settling  the  accounts  of  the  several  departments,  to 
inquire  into  and  make  an  inspection' of  articles  and  materials 
furnished  or  work  and  labor  performed,  for  the  purpose  of  as- 
certaining that  the  prices,  quality  and  amount  of  such  articles 
or  labor  are  fair,  just  and  reasonable,  and  that  all  the  require- 
ments, express  and  implied,  pertaining  thereto  have  been  com- 
plied with,  and  to  reject  and  disallow  any  excess; 

12.  To  prepare  and  report  to   the   Governor,   when   re- 
quested, estimates  of  the  income  and  revenues  of  the  State ; 

13.  To  prepare  and  submit  to  the  Governor  biennially,  not 
later  than  the  first  day  of  January  preceding  the  convening  of 
the  General  Assembly,  a  State  budget ; 

14.  To  publish,  from  time  to  time,  for  the  information  of 
the  several  departments  and  of  the  general  public,  bulletins  of 
the  work  of  the  government; 

15.  To  investigate  duplication  of  work  of  departments  and 
the  efficiency  of  the  organization  and  administration  of  depart- 
ments, and  to  formulate  plans  for  the  better  coordination  of 
departments. 

Sec.  37.  In  the  preparation  of  a  State  budget,  the  Director 
of  Finance  shall,  not  later  than  the  fifteenth  day  of  September 
in  the  year  preceding  the  convening  of  the  General  Assembly, 
distribute  to  all  departments  and  to  all  offices  and  institutions 
of  the  State  government  (including  the  elective  officers  in 
the  executive  department  and  including  the  University  of  Illi- 
nois and  the  judicial  department)  the  proper  blanks  necessary 
to  the  preparation  of  budget  estimates,  which  blanks  shall  be 
in  such  form  as  shall  be  prescribed  by  the  Director  of  Finance, 
to  procure,  among  other  things,  information  as  to  the  revenues 
and  expenditures  for  the  two  preceding  fiscal  years,  the  ap- 
propriations made  by  the  previous  General  Assembly,  the  ex- 
penditures therefrom,  encumbrances  thereon,  and  the  amounts 
unencumbered  and  unexpended,  an  estimate  of  the  revenues 
and  expenditures  of  the  current  fiscal  year,  and  an  estimate  of 
the  revenues  and  amounts  needed  for  the  respective  depart- 
ments and  offices  for  the  two  years  next  succeeding  beginning 
at  the  expiration  of  the  first  fiscal  quarter  after  the  adjourn- 
ment of  the  General  Assembly.  Each  department,  office  and 

Si 


BUDGETARY  REFORM  IN  THE  STATES 

institution  (including  the  elective  officers  in  the  executive  and 
judicial  departments  and  including  the  University  of  Illinois) 
shall,  not  later  than  the  first  day  of  November,  file  in  the  office 
of  the  Director  of  Finance  its  estimate  of  receipts  and  ex- 
penditures for  the  succeeding  biennium.  Such  estimates  shall 
be  accompanied  by  a  statement  in  writing  giving  facts  and  ex- 
planation of  reasons  for  each  item  of  expenditure  requested. 
The  Director  of  Finance  may,  in  his  discretion,  make  further 
inquiries  and  investigations  as  to  any  item  desired.  He  may 
approve,  disapprove  or  alter  the  estimates.  He  shall,  on  or 
before  the  first  day  of  January  preceding  the  convening  of  the 
General  Assembly,  submit  to  the  Governor  in  writing  his  esti- 
mates of  revenues  and  appropriations  for  the  next  succeeding 
biennium. 

Sec.  38.  The  Governor  shall  as  soon  as  possible  and  not 
later  than  four  weeks  after  the  organization  of  the  General 
Assembly  submit  a  State  budget,  embracing  therein  the 
amounts  recommended  by  him  to  be  appropriated  to  the  re- 
spective departments,  offices,  and  institutions,  and  for  all  other 
public  purposes,  the  estimated  revenues  from  taxation,  the 
estimated  revenues  from  sources  other  than  taxation,  and  an 
estimate  of  the  amount  required  to  be  raised  by  taxation. 
Together  with  such  budget,  the  governor  shall  transmit  the 
estimates  of  receipts  and  expenditures,  as  received  by  the  Di- 
rector of  Finance,  of  the  elective  officers  in  the  executive  and 
judicial  departments  and  of  the  University  of  Illinois. 

Sec.  39.  Each  department  shall,  before  an  appropriation 
to  such  department  becomes  available  for  expenditure,  pre- 
pare and  submit  to  the  department  of  finance  an  estimate  of 
the  amount  required  for  each  activity  to  be  carried  on,  and 
accounts  shall  be  kept  and  reports  rendered  showing  the  ex- 
penditures for  each  such  purpose. 

Iowa.  On  March  17,  1913,  the  Joint  Committee  on  Re- 
trenchment and  Reform  of  the  General  Assembly,  a  body 
which  had  previously  been  created  to  report  upon  action  that 
should  be  taken  to  improve  the  administration  of  public  affairs, 
was  authorized  to  employ  expert  accountants  and  efficiency 
engineers  to  assist  it  in  its  work.  The  services  of  Quail, 
Parker  &  Co.  were  obtained  for  this  purpose.  On  December 
21,  1913,  this  firm  submitted  a  report  advocating,  among  other 

52 


BUDGETARY  LEGISLATION 

things,  a  new  department  of  finance  under  the  state  treasurer 
and  state  auditor  which  would  make  possible  a  system  of 
budgetary  control.  On  November  12,  1914,  the  joint  com- 
mittee published  a  preliminary  report  in  which  it  recom- 
mended that  all  administrative  authority  be  vested  in  the  hands 
of  the  Governor,  and,  to  that  end,  that  he  be  given  the  power 
of  appointment  of  all  important  administrative  officers,  and 
have  the  duty  of  submitting  to  the  legislature  a  biennial  budget 
setting  forth  the  appropriations  which,  in  his  opinion,  should 
be  voted  for  the  support  of  the  government. 

This  latter  recommendation  was  acted  upon  in  the  following 
year. 

The  measure  enacted  does  not  provide  for  a  budget  in  the 
comprehensive  sense  of  the  term  but  covers  only  the  matter 
of  estimates  of  appropriations.  It  is,  however,  a  step  in  the 
right  direction  since  it  establishes  the  principle  of  having  the 
governor  or  chief  executive  lay  before  the  legislature  his  work 
or  expenditure  program.  Its  text  is  as  follows: 

An  Act  to  provide  information  which  shall  serve  as  a  basis 
for  legislative  appropriations.  Approved  April  6,  1915. 
[Code  Sections  191  a  and  19 ib.] 

Section  I9i-a.  Every  officer,  board,  commission  or  com- 
mittee having  charge  of  any  department,  institution  or  under- 
taking which  receives  an  annual  appropriation  of  money,  from 
the  treasury  of  the  state,  including  appropriations  to  be  made 
by  assessment,  shall,  biennially,  on  or  before  the  fifteenth  day 
of  November,  immediately  prior  to  the  convening  of  the  gen- 
eral assembly,  in  regular  session,  submit  to  the  governor,  state- 
ments showing  in  detail  the  amounts  appropriated  for  the  cur- 
rent biennial  period,  estimates  of  the  amounts  required  for  the 
ensuing  biennial  period,  with  an  explanation  of  the  reason  for 
any  increased  appropriation,  and  all  receipts  (giving  the  source 
thereof)  and  expenditures  for  the  current  biennial  period  tab- 
ulated. 

Sec.  191 -b.  On  the  day  fixed  by  law  for  the  governor  to 
present  to  the  general  assembly  his  official  message,  he  shall 
at  the  same  time  submit  to  the  general  assembly  a  budget 
which  shall  contain  in  detail  general  information  and  in  gen- 

53 


BUDGETARY  REFORM  IN  THE  STATES 

eral  form  his  recommendations  to  the  general  assembly  for 
appropriations  for  all  the  different  departments  and  boards  and 
state  officials,  together  with  such  explanation  thereof  as  he 
may  desire  to  present.  The  governor  shall  not  be  required  to 
read  this  but  it  shall  be  printed  in  the  journal  as  a  part  of 
his  message  to  the  general  assembly  and  shall  be  officially 
known  as  the  budget. 

Kansas.  On  March  7,  1917,  Kansas  passed  an  act  provid- 
ing  for  an  out-and-out  budgetary  system  in  so  far  as  the  for- 
mulation of  a  budget  by  the  Governor  is  concerned.  This  act 
provides  that  all  estimates  of  appropriations  shall  be  submitted 
to  the  Governor  on  forms  prepared  by  the  auditor  and  ap- 
proved by  the  Governor  and  shall  be  accompanied  by  such 
financial  statements  as  the  latter  shall  prescribe.  It  is  made 
the  duty  of  the  Governor  to  revise  and  compile  these  estimates 
and  submit  them  to  the  legislature  as  his  budget.  In  per- 
forming this  work  he  is  empowered  to  make  such  investiga- 
tion of  the  departments  of  the  government  as  he  finds  neces- 
sary. No  attempt  is  made,  however,  to  prescribe  the  pro- 
cedure to  be  followed  by  the  legislature  in  acting  upon  such 
budget. 

Following  is  a  copy  of  this  act : 

An  Act  to  provide  a  budget  system  and  to  provide  a  method 
of  ascertaining  the  financial  condition  of  the  state  and  the 
appropriations  necessary  for  the  various  departments,  in- 
stitutions and  other  agencies  of  the  state.  Approved  March 
7,  1917.  (Acts  of  1917,  ch.  312.) 

Section  i.  Each  department  of  the  state  government,  ex- 
cept the  legislature,  each  board,  commission,  charitable  or 
correctional  institution,  or  any  other  state  agency,  requiring 
an  appropriation  from  the  state,  shall  present  a  request  there- 
for to  the  governor  on  or  before  November  fifteenth  of  each 
year.  Any  organization,  body,  committee  or  person  intending 
to  request  an  appropriation  from  the  legislature  for  any  par- 
ticular object  or  purpose  or  for  any  expenditure,  shall  likewise 
present  such  request  to  the  governor  on  or  before  November 
fifteenth  of  the  year  prior  to  the  meeting  of  the  legislature. 

54 


BUDGETARY  LEGISLATION 

Sec.  2.  Such  requests  shall  be  made  by  the  head  of  such 
department,  president  or  chairman  of  such  board  or  commis- 
sion, or  officer  designated  by  the  board  of  managers  or  other 
governing  body  of  such  charitable  or  correctional  institution, 
or  other  state  agency.  In  the  case  of  the  judiciary,  the  state 
auditor  shall  certify  to  the  governor  on  or  before  November 
fifteenth  of  the  year  prior  to  the  meeting  of  the  legislature,  the 
amount  necessary  to  pay  the  salaries  of  the  judges  of  the 
supreme  court,  judges  of  the  district  court,  officers,  clerks  and 
stenographers  of  the  supreme  court  and  stenographers  of  the 
district  court,  and  the  clerk  of  the  supreme  court,  under  the 
direction  of  the  chief  justice  of  said  court,  shall  make  a  re- 
quest of  the  governor  for  such  contingent  fund  and  appropria- 
tions outside  of  salaries  as  may  be  deemed  necessary.  In  the 
case  of  any  organization,  body,  committee  or  person  as  men- 
tioned in  section  two,  the  request  shall  be  made  by  some  per- 
son duly  authorized  therefor. 

Sec.  3.  Such  requests  shall  be  made  upon  blank  forms  to 
be  furnished  by  the  state  auditor  as  approved  by  the  governor. 
The  blank  forms  shall  be  filled  in  accordance  with  the  rules 
which  shall  be  formulated  by  the  governor  together  with  the 
auditor.  The  rules  may  be  amended  or  new  rules  adopted  by 
the  governor  from  time  to  time  as  conditions  may  require. 

Sec.  4.  All  such  requests  for  appropriation  shall  show  in 
detail  the  purposes  for  which  appropriations  are  requested,  and 
where  increases  or  decreases  from  previous  appropriations  are 
desired  the  reason  therefor.  Such  requests  shall  be  sworn 
to  by  the  person  making  the  same,  which  oath  shall  be  in  the 
form  provided  by  rule,  except  that  the  auditor  shall  not  be  re- 
quired to  verify  the  request  made  for  the  judiciary  appro- 
priation. 

Sec.  5.  There  shall  accompany  such  requests  for  appro- 
priations an  itemized  financial  statement  and  also  a  trial  bal- 
ance covering  the  preceding  fiscal  year,  showing  the  receipts 
and  expenditures  of  the  department  or  body  presenting  such 
request  in  such  form  and  detail  as  the  governor  may  direct. 

Sec.  6.  On  November  fifteenth  of  the  year  preceding  the^ 
meeting  of  the  legislature,  and  thereafter  as  often  as  required 
by  the  governor,  the  state  auditor  and  state  treasurer  shall 
jointly  transmit  to  the  governor,  in  such  form  as  he  shall  direct, 
a  summary  of  the  financial  condition  of  the  state.  This  report 
shall  show,  in  condensed  form,  the  financial  condition  of  the 

55 


BUDGETARY  REFORM  IN  THE  STATES 

state,  the  amounts  expended  and  the  amounts  received,  the 
sources  and  amounts  of  income,  and  the  free  balance  in  the 
treasury.  The  report  shall  likewise  show  the  probable  sources 
of  revenue  and  the  probable  state's  income  available  for  ap- 
propriations for  the  fiscal  years  for  which  the  legislature  will 
be  requested  to  make  appropriations. 

Sec.  7.  Upon  the  receipt  of  requests  for  appropriations 
and  the  report  of  the  state  treasurer  and  state  auditor,  the 
governor  shall  proceed  to  examine  such  requests  and  reports 
for  the  purpose  of  determining  the  necessity  of  the  appropria- 
tions so  requested  and  shall  in  a  separate  message  transmit  to 
each  member  elect  of  the  legislature  on  the  second  Tuesday  in 
January  such  requests  and  reports,  together  with  his  recom- 
mendations thereon. 

Sec.  8.  For  the  purpose  of  investigating  the  necessity  of 
the  appropriations  so  requested  or  for  the  purpose  of  ascertain- 
ing if  either  new  sources  of  income  are  required  or  present 
sources  of  income  are  properly  collected  or  for  any  similar 
purpose,  at  any  time,  the  governor  may  summon  witnesses  and 
conduct  hearings  or  appoint  any  officer  of  the  state  govern- 
ment or  any  other  person  particularly  fitted  therefor  to  con- 
duct any  investigation  or  examination  necessary  to  aid  him  in 
this  purpose. 

Sec.  9.  The  message  of  the  governor  shall  be  in  such  form 
that  it  can  be  easily  understood  by  the  average  citizen,  and 
shall  be  printed  and  a  copy  thereof  presented  to  each  member 
of  the  legislature,  the  press,  and  each  public  library. 

Sec.  10.  If  he  deems  it  necessary,  the  governor  may  from 
time  to  time  transmit  special  messages  requesting  additional 
appropriations  for  purposes  not  anticipated  at  the  time  the 
budget  message  was  transmitted  to  the  legislature. 

Sec.  ii.  Whenever  any  act  creating  or  regulating  any 
body,  mentioned  in  section  two  of  this  act,  shall  limit  the 
amount  which  such  body  shall  expend,  such  act  shall  be  deemed 
to  be  repealed  in  so  far  as  such  limit  is  concerned  if  a  greater 
amount  is  appropriated  by  any  succeeding  legislature  to  the 
extent  only  of  such  greater  amount. 

Sec.  12.  Any  department  of  the  state  government,  board, 
commission,  charitable  or  correctional  institution,  or  any  other 
state  agency  which  derives  its  income  in  part  or  in  whole 
from  fees,  licenses,  taxes,  penalties,  or  in  any  manner,  by  rea- 
son of  any  law  whereby  such  income  is  paid  directly  to  such 

56 


BUDGETARY  LEGISLATION 

body  for  its  support  and  not  by  appropriation  from  the  state 
treasury,  shall  supply  information  concerning  such  income  and 
the  expenditure  thereof  either  in  the  form  required  for  appro- 
priations or  in  any  other  form  which  the  governor  may  direct, 
and  the  governor  shall  have  the  same  powers  of  investigation 
over  such  bodies  as  over  other  bodies  requesting  appropria- 
tions under  this  act. 

Sec.  13.  The  expense  of  conducting  any  investigation  au- 
thorized in  this  act  may  be  drawn  from  either  a  special  appro- 
priation made  for  this  purpose  or  from  the  governor's  con- 
tingent fund.  Such  expenses  shall  be  paid  upon  the  certificate 
of  the  governor. 

Sec.  14.  Nothing  in  this  act  shall  be  construed  as  repeal- 
ing any  act  or  provision  requiring  the  state  auditor,  the  state 
treasurer,  or  other  state  officers,  to  make  reports  to  the  gov- 
ernor. 

Sec.  15.  This  act  should  be  liberally  construed,  and  if  any 
section  thereof  shall  be  declared  unconstitutional  by  any  court 
of  competent  jurisdiction,  it  shall  not  thereby  affect  any  other 
section  thereof. 

Sec.  1  6.  That  section  10719  of  the  General  Statutes  of 
1915  and  all  acts  and  parts  of  acts  in  conflict  herewith  are 
repealed. 

Sec.  17.  This  act  shall  take  effect  and  be  in  force  from 
and  after  its  publication  in  the  statute  book. 

Minnesota.  Minnesota  is  among  the  states  which  have 
taken  definite  steps  looking  to  the  introduction  of  a  budgetary 
system  in  so  far  as  the  requirement  that  the  Governor  shall 
submit  such  a  document  is  concerned.  In  October, 


,^ 

Governor  W.  S.  Hammond  on  his  own  initiative,  and  without 
special  legislative  authorization,  appointed  a  Commission  on 
Economy  and  Efficiency,  composed  of  thirty  members,  most 
of  whom  were  from  private  walks  of  life,  for  the  purpose 
of  investigating  and  reporting  to  him  means  by  which  the 
administration  of  state  affairs  might  be  put  upon  a  more 
efficient  basis.  This  commission  made  a  preliminary  and  a 
final  report. 

Among  its  recommendations  was  one  that  provision  should 
be  made  by  law  for  the  submission  by  the  Governor  of  a 

57 


BUDGETARY  REFORM  IN  THE  STATES 

biennial  budget.  This  recommendation  was  favorably  acted 
upon  by  the  legislature  in  1915,  through  the  passage  of  an 
act  which  takes  the  first  essential  step  towards  the  perfection 
of  a  scientific  budgetary  system  by  definitely  placing  upon 
the  Governor  the  obligation  of  submitting  to  the  legislature  a 
consolidated  statement  of  the  provision  which  in  his  opinion 
should  be  made  for  the  support  of  the  government  during 
the  biennium  to  ensue.  It  furthermore  provides,  with  espe- 
cial care,  that  this  statement  shall  be  in  such  form  that  com- 
parisons can  be  made  with  expenditures  in  the  past.  Of  espe- 
cial interest,  however,  is  the  provision  that  each  department 
shall,  immediately  upon  an  appropriation  for  its  support  being 
made,  proceed  to  sub-appropriate  or  allot  the  sum  so  granted 
for  the  purposes  set  forth  in  the  budget.  This  allotment  of 
funds  may  subsequently  be  changed,  but  the  original  allotment 
and  all  subsequent  changes  must  be  reported  to  the  auditor  who 
is  thus  enabled  to  keep  his  accounts  of  expenditures  by  such 
heads.  This  provision  is  of  special  interest  to  the  writer  of 
this  volume  since  it  corresponds  closely  to  the  procedure  rec- 
ommended by  him  in  a  paper  read  before  the  American  Po- 

(    litical  Science  Association  in  1912  on  "Allotment  of  Funds 
by  Executive  Officials  an  Essential  Feature  of  any  Correct 

,    Budgetary  System.'*  x 

Following  is  the  text  of  the  act : 

An  Act  to  provide  for  a  biennial  budget  and  estimate  of  pre- 
vious appropriations,  expenditures  and  income  of  this  state 
and  of  future  requirements,  expenditures  and  income  there- 
of, and  prescribing  the  manner  of  their  preparation  and 
submission  to  the  legislature.  Approved  April  24,  1915. 
(Acts  of  1915,  Chapter  356.) 

Section  i.     The  word  "estimate"  as  used  in  this  title  shall 
mean  a  statement  showing: 

1.  The  expenditure  for  the  purposes  specified  during  each 
year  of  the  current  biennial  period. 

2.  The  funds  available  or  appropriations  authorized  for 

1  Reprinted  as  Chapter  VII  of  The  Problem  of  a  National  Budget. 


• 


BUDGETARY  LEGISLATION    - 

the  same  purpose,  during  each  year  of  the  current  biennial 
period. 

3.  The  amounts  needed  during  each  year  of  the  ensuing 
biennial  period  for  the  work,  and  for  the  other  disbursements 
of  any  department  bureau,  board,  institution,  office  or  branch 
of  the  state  government,  including  purchases  of  land  and  per- 
manent improvements. 

4.  The  anticipated  funds  or  revenues  available  for  such 
purposes  and  the  anticipated  receipts  in  connection  with  such 
work. 

5.  Such  other  information  as  may  be  required  by  law  or 
by  executive  order. 

The  word  ''budget"  shall  mean  the  complete  estimates  for 
the  entire  state  government,  including  a  summary  thereof  and 
a  schedule  of  appropriations  required  and  of  estimated  tax 
levies  to  correspond  therewith. 

Sec.  2.  Every  officer,  board,  commission  or  institution  of 
this  state,  under  whose  direction  any  public  money  is  to  be 
expended  shall  prepare  an  estimate  at  such  time  and  in  such 
form  as  may  be  required  by  law  or  executive  order. 

Sec.  3.  Every  estimate  so  prepared  shall  be  submitted  to 
the  governor;  provided  that  the  estimates  of  subordinate  offi- 
cers or  boards  shall  be  submitted  to  the  superior  officer  or 
board  under  whose  direction  the  official  making  such  estimate 
is  directly  acting. 

Sec.  4.  It  shall  be  the  duty  of  every  officer  and  of  the  mem- 
bers of  every  board  to  whom  any  such  estimates  are  submitted, 
to  assemble  the  same,  and  in  consultation  with  the  subordinate 
officers  or  boards  submitting  them,  to  revise  such  estimates  be- 
fore they  are  finally  submitted  to  the  governor,  which  shall  be 
done  not  later  than  the  first  day  of  December  in  each  year 
immediately  preceding  the  regular  session  of  the  legislature. 

Sec.  5.  It  shall  be  the  duty  of  the  governor,  not  later  than 
December  3ist  immediately  preceding  each  regular  session 
of  the  legislature,  to  assemble  all  estimates  so  prepared  and 
in  consultation  with  the  chief  executive  officers  to  make  final 
revision  of  such  estimates,  having  in  view  the  total  expendi- 
tures, total  revenues  and  the  tax  levy,  and  to  that  end  he  shall 
include  the  estimated  expenditures  for  the  judiciary,  the  leg- 
islature, the  state  university  and  the  state  militia.  He  shall 
thereupon  prepare  the  "budget"  and  shall  cause  to  be  printed 
in  a  form  convenient  for  the  legislature,  a  sufficient  number 

59!  . 


BUDGETARY  REFORM  IN  THE  STATES 

of  copies  thereof  to  supply  at  least  one  copy  to  each  member 
of  the  legislature  and  to  the  chief  executive  officers  of  the 
state,  and  shall  lay  it  before  each  branch  of  the  legislature  not 
later  than  the  first  day  of  February. 

Sec.  6.  Every  estimate  shall  be  in  such  form  as  required  by 
law  or  as  the  governor  may  by  executive  order  direct.  All 
estimates  shall  be  as  nearly  as  practicable  of  a  similar  form. 

Sec.  7.  Every  estimate  shall  present  the  following  infor- 
mation and  such  other  information  as  may  be  required  by  law 
or  as  the  governor  may  direct : 

1.  It  shall  show  in  parallel  columns : 
Name  of  item. 

Citation  to  statutes  authorizing  the  service  or  fixing  partic- 
ular items. 

Appropriations  for  each  year  of  the  current  biennial  period. 

The  actual  expenditures  and  anticipated  expenditures  dur- 
ing each  year  of  the  biennium. 

Amounts  needed  for  each  year  of  the  coming  biennium. 

Explanations  of  increases  or  decreases. 

Estimated  revenue  or  receipts  in  connection  with  each 
service. 

2.  It  shall  distinguish  each  line  of  work  or  activity  and 
shall  distinguish  at  least  the  following  classes  of  expenditures : 
(i)  Salaries;  (2)  Permanent  improvements  and  equipment; 
(3)  All  other  expenses. 

Sec.  8.  It  shall  be  the  duty  of  each  disbursing  officer  or 
board  within  thirty  days  after  the  passage  of  any  appropria- 
tion by  the  state  legislature  to  allot  within  each  appropriation 
to  be  expended  under  his  or  its  direction,  the  amounts,  if  any, 
for  the  several  purposes  set  forth  in  the  "budget"  submitted 
to  the  legislature,  not  inconsistent  with  the  terms  of  the  ap- 
propriation act.  Subject  to  the  restrictions  of  the  appropria- 
tion act  allotments  may,  in  case  of  necessity,  be  altered  by  the 
officer  or  board  charged  with  the  disbursement  thereof.  All 
such  allotments  and  any  changes  thereof  shall,  as  soon  as 
made,  be  filed  with  the  state  auditor. 

Sec.  9.  A  debit  and  credit  account  of  every  allotment  shall 
be  kept  by  the  auditor  and  by  the  officer  or  board  concerned 
and  no  expenditure  shall  be  made  in  excess  of  the  balance 
available  therein. 

Sec.  10.  This  act  shall  take  effect  and  be  in  force  from 
and  after  its  passage. 

60 


BUDGETARY  LEGISLATION 

Nebraska.  In  1915,  Nebraska  passed  an  exceptionally 
well-iworded  statute  providing  for  the  establishment  of  a 
budgetary  system  in  the  state.  This  statute  had  the  prime 
merit  of  making  it  perfectly  clear  that  responsibility  for  the 
preparation  of  the  budget  rests  squarely  upon  the  Governor. 
"The  Governor,"  it  reads,  "is  hereby  made  chief  budget  offi- 
cer. It  shall  be  his  duty  to  prepare  and  transmit  to  the 
Legislature  at  the  opening  of  the  Legislative  session  a  detailed 
and  summarized  estimate  of  the  state's  revenue  and  expendi- 
tures for  the  ensuing  biennium  as  recommended  by  him,  to- 
gether with  brief  reasons  for  his  recommendations  for  each 
item  in  such  estimates  wherein  a  change  is  proposed  from 
that  of  the  previous  biennium." 

Other  sections  direct  all  officers  to  aid  the  Governor  in 
preparing  the  estimates,  and  the  auditor  to  keep  his  books  in 
such  a  manner  that  the  expenditures  for  each  activity,  each 
organization  unit,  and  each  principal  item  of  expenditure  can 
be  shown  "in  a  manner  most  easily  intelligible  by  the  average 
citizen."  Those  requirements,  together  with  the  fact  that  the 
budget  must  contain  estimates  of  revenue  as  well  as  expendi- 
tures and  include  supporting  tables  showing,  among  other 
things,  estimates  for  capital  outlay  as  distinguished  from 
current  expense,  show  that  the  essential  elements  of  a  proper 
budgetary  system  are  clearly  appreciated  and  provided  for. 

The  only  features  which  are  not  sufficiently  provided  for 
are  those  of  making  clear  that  the  estimates  should  be  shown 
in  comparison  with  past  revenues  and  expenditures  and  pro- 
vision for  the  current  biennium,  and  of  providing  a  special 
organ  through  which  the  Governor  may  exercise  his  power 
of  general  direction,  supervision  and  control  over  the  admin- 
istrative services  and  discharge  his  duties  of  examining  esti- 
mates as  submitted  by  these  departments  as  a  necessary  part 
of  his  function  of  preparing  the  budget.  The  former  of  these 
considerations  can  be  met  under  the  law  as  framed.  Further 
action,  however,  is  required  to  meet  the  latter. 

61 


BUDGETARY  REFORM  IN  THE  STATES 

Following  is  a  copy  of  the  act,  the  main  provisions  of 
whch  have  just  been  summarized : 

An  Act  to  provide  a  budget  system  for  the  state;  fixing  the 
duties  of  the  Auditor  of  Public  Accounts  in  relation  thereto ; 
authorizing  and  requiring  the  Governor  to  prepare  a  state 
budget  of  estimated  revenue  and  recommended  expenditures 
and  present  the  same  to  the  state  legislature.  Approved 
April  16,  1915.  (Acts  of  1915,  Chapter  229.) 

Section  i.  There  is  hereby  established  a  budget  system  of 
accounting  for  state  expenditure  and  presenting  a  plan  of  state 
revenue  and  expenses  to  the  Legislature  and  the  people  of  Ne- 
braska. The  Governor  is  hereby  made  chief  budget  officer. 
It  shall  be  his  duty  to  prepare  and  transmit  to  the  Legislature 
at  the  opening  of  the  Legislative  Session  a  detailed  and  sum- 
marized estimate  of  the  state's  revenue  and  expenditures  for 
the  ensuing  biennium  as  recommended  by  him,  together  with 
brief  reasons  for  his  recommendations  for  each  item  in  such 
estimate  wherein  a  change  is  proposed  from  that  of  the  pre- 
vious biennium. 

Sec.  2.  Said  budget  shall  contain  a  detailed  statement  of 
the  following  matters  as  nearly  as  they  may  be  ascertained. 

1 i )  Total  assessed  valuation  of  the  state,  classified  as  per 
last  grand  assessment  roll. 

(2)  Public  debt  of  the  state,  floating  or  bonded  and  the 
annual  interest  charge  thereon. 

(3)  Total  receipts  and  expenditures  of  the  state  for  the 
previous  biennium. 

(4)  Total  estimated  revenue  of  the  state  for  the  coming 
biennium  classified  as  to  its  sources. 

( 5  )  Total  expenditure  of  the  state  during  the  previous  bi- 
ennium covering  the  two  fiscal  years  ending  with  November 
3Oth  next  prior  to  the  convening  of  the  Legislature  classified 
for  each  department  and  institution. 

(6)  Total  estimated  state  expenditures  for  the  coming 
biennium  so  classified  as  to  exhibit  clearly  the  items  of  ex- 
penditure proposed  and  showing  the  distinction  between  such 
expenditures  for  permanent  improvements,  salaries,  mainte- 
nance and  new  governmental  undertaking. 

Sec.  3.  In  the  preparation  of  the  budget  aforesaid  the 
Governor  shall  have  the  assistance  of  every  officer  of  the  state 

62 


BUDGETARY  LEGISLATION 

and  any  such  officer  upon  request  shall  forthwith  furnish  the 
Governor  from  the  records  of  his  office  such  information  as 
he  may  require.  The  Governor  shall  cause  the  budget  mes- 
sage to  be  printed  in  form  convenient  for  use  and  copies  shall 
be  supplied  at  the  time  of  its  delivery  to  members  of  the  Leg- 
islature, the  press,  and  other  citizens  upon  written  application. 
Sec.  4.  As  an  aid  to  the  establishment  of  the  budget  system 
it  shall  be  the  duty  of  the  auditor  of  public  accounts  to  keep  a 
set  of  books  which  shall  exhibit  in  condensed  form  in  a  man- 
ner most  easily  intelligible  by  the  average  citizen  the  expenses 
of  the  state  government  by  fiscal  years  for  each  of  the  activi- 
ties undertaken  by  the  state,  the  expenses  of  each  department 
and  division  of  the  government  under  each  of  the  principal 
items  of  expenditure  and  the  summary  thereof.  Typewritten 
abstracts  of  this  set  of  books  shall  be  prepared  and  furnished 
to  the  public  press  at  the  close  of  each  fiscal  year  so  arranged 
as  to  inform  the  citizens  in  the  clearest  manner  possible  of  the 
expenses  of  the  various  branches  of  government.  It  is  here- 
by made  the  duty  of  each  department,  institution,  board,  com- 
mission, society,  survey  or  other  organization  receiving  ap- 
propriations from  the  state  to  certify  monthly  to  the  auditor 
of  public  accounts,  on  blanks  approved  by  the  auditor  for  that 
purpose,  an  itemized  list  of  expenditures  as  shown  by  the 
vouchers  drawn  against  the  various  funds  appropriated  for  the 
use  of  such  department,  institution,  board,  commission,  so- 
ciety, survey  or  other  organization,  with  a  summary  of  the 
same  under  headings  approved  by  the  auditor.  In  case  of  sev- 
eral organizations  under  the  government  of  a  single  board  the 
certification  may  be  made  by  the  governing  board. 

New  Jersey.  In  a  number  of  respects  New  Jersey  has 
made  important  advances  towards  the  establishment  of  a 
proper  budgetary  system  for  the  administration  of  its  finances. 
In  the  first  place  the  state  starts  with  the  great  advantage  that 
it  has  in  principle  an  integrated  administrative  system  analo- 
gous to  that  of  the  national  government.  By  a  revision  of  the 
constitution  in  1844  provision  was  made  for  the  election  of  the 
Governor  by  the  people  and  the  conferring  upon  him  of  im- 
portant powers.  Prior  to  that,  under  the  constitution  adopted 
in  1776,  the  Governor  was  elected  by  the  two  houses  of  the 
legislature  sitting  jointly,  and  was  little  more  than  a  figure- 

63 


BUDGETARY  REFORM  IN  THE  STATES 

head.  By  the  revision  of  1844  ne  was  made  the  only  elected 
officer  of  the  executive  branch,  other  important  officers  of  that 
branch  being  appointed  by  him  by  and  with  the  consent  of  the 
upper  house.  He  was  at  the  same  time  given  the  power  of 
making  recommendations  to  the  legislature  and  of  vetoing  not 
only  bills  but  specific  items  in  appropriation  bills. 

Secondly,  the  state  has  the  desirable  feature  of  having  but 
one  joint  committee  on  appropriations  for  the  consideration  of 
appropriation  bills  instead  of  separate  committees  for  the  two 
houses  as  is  the  prevailing  practice  in  the  national  government 
and  most  of  the  states. 

Notwithstanding  these  advantages,  conditions,  until  the 
passage  of  the  next  act  of  1916  providing  for  an  executively 
formulated  budget,  the  provision  of  which  will  shortly  be  de- 
scribed, were  but  little,  if  any,  better  than  those  prevailing  in 
other  states.  The  evils  of  the  pork  barrel,  special  legisla- 
tion, the  voting  of  funds  without  any  clear-cut  financial  or 
work  programs  were  in  full  evidence.  The  history  of  the 
movement  for  the  correction  of  these  evils,  which  culminated 
in  the  act  of  1916,  to  which  reference  has  been  made,  is  in- 
terestingly told  in  a  recent  number  of  "Municipal  Research" 
and  from  it  the  following  facts  are  chiefly  taken.1 

A  first  step  in  the  direction  of  financial  reform  was  made 
in  1894  by  the  appointment  of  a  senate  committee  to  investi- 
gate state  expenditures.  This  committee  agreed  that  one  of 
the  chief  evils  of  the  existing  system  consisted  in  the  right  of 
individual  members  of  the  legislature  to  introduce  measures 
carrying  an  appropriation  and  in  the  multiplicity  of  appropria- 
tion acts.  It  accordingly  recommended  that  all  appropriations 
for  a  year  should  be  made  in  a  single  appropriation  bill. 
This  recommendation  was  accepted  and  an  act  was  passed  in 
1895  providing  for  a  single  appropriation  bill.2 

In  1907  and  1914,  further  reforms  were  accomplished  by 

1  Financial  Legislation  in  New  Jersey,  Municipal  Research,  Feb., 
1916. 
'Acts  of  1895,  p.  788. 

64 


BUDGETARY  LEGISLATION 

the  passage  of  acts  calling  for  improved  methods  of  account- 
ing and  auditing.  On  April  i,  1912,  provision  *was  made  by 
the  legislature  for  the  appointment  of  a  commission  of  seven 
"for  the  purpose  of  considering  the  best  means  to  consolidate 
various  boards  and  to  broaden  the  powers  in  one  central  board, 
or  boards."  *  Attention  has  already  been  called  to  the  fact 
that,  constitutionally,  New  Jersey  has  an  administrative  system 
of  the  integrated  type.  The  benefits  of  this  system  had,  how- 
ever, in  large  part  been  lost  by  the  creation  of  an  excessive 
number  of  separate  agencies.  "It  has  been  the  practice  in 
this  state  to  organize  a  separate  commission  for  each  new 
phase  of  work.  It  has  been  carried  to  such  an  extent  that 
we  venture  to  say  that  if  in  the  opinion  of  the  legislature  it 
was  advisable  to  have  a  state  park  in  each  county,  instead  of 
organizing  one  department  to  acquire  the  land  and  to  develop 
and  care  for  the  parks,  twenty-one  commissions  would  be 
organized,  twenty-one  secretaries  would  be  secured  and  twen- 
ty-one staffs  of  engineers  and  clerks  would  be  employed."  2 

This  commission  made  a  careful  study  of  the  administrative 
services  of  the  government  and  has  submitted  four  reports  to 
the  legislature.  Its  recommendations  were  that  the  state  adopt 
the  departmental  type  of  organization,  that  is,  one  where  all 
related  services  are  either  consolidated  or  brought  together  in 
one  department.  It  reported  various  bills  providing  for  this 
action,  a  number  of  which  have  been  adopted. 

The  reorganization  of  the  State  Board  of  Health,  the  con- 
solidation of  the  various  oyster  commissions,  the  consolida- 
tion of  the  State  Board  of  Taxation  and  the  State  Board  for 
the  Equalization  of  Taxes,  the  creation  of  the  Department  of 
Conservation  and  Development,  superseding  the  Forest  Park 
Reservation  Commission,  the  Geological  Survey,  several  park 
commissions  and  the  State  Water  Supply  Commission  after 
July  ist,  1916,  the  establishment  of  the  Department  of  Com- 

1  Joint  Resolution  No.  6,  Laws  of  New  Jersey,  1912,  p.  945-946. 

*  Second  Report  of  the  Commission  upon  the  Reorganization  and 
Consolidation  of  Different  Departments  of  the  State  Government 
whose  Functions  are  Interrelated,  1914,  p.  13. 

65 


BUDGETARY  REFORM  IN  THE  STATES 

merce  and  Navigation  which  takes  over  the  duties  of  the  for- 
mer Department  of  Inland  Waterways,  the  New  Jersey  Ship 
Canal  Commission,  the  Commission  on  Port  Conditions,  Ob- 
structions to  Navigation  and  Inspection  of  Power  Vessels,  the 
consolidation  of  the  Bureau  of  Labor  Statistics  with  the  De- 
partment of  Labor,  these  represent  in  part  the  work  of  this 
commission  during  the  past  year.1 

Though  this  commission  did  not  directly  concern  itself  with 
the  question  of  a  budget,  reference  has  been  made  to  its 
work  since,  as  has  been  repeatedly  pointed  out,  the  creation 
of  a  properly  integrated  scheme  of  administrative  services  con- 
stitutes such  an  integral  and  essential  part  of  the  problem  of 
establishing  a  budgetary  system  upon  a  proper  basis. 

The  foregoing  reforms  may  thus  be  deemed  ones  preparing 
the  way  for  the  introduction  of  a  budget  rather  than  deliberate 
steps  in  that  direction.  The  first  step  in  this  direction  was 
made  in  1916  by  the  passage  by  a  unanimous  vote  of  the 
highly  important  Lodge  budget  bill,  so  styled  from  the  name 
of  its  author.  It  is  of  interest  that  Senator  Lodge  was  chair- 
man of  the  Economy  and  Efficiency  Commission,  the  work  of 
which  has  just  been  described,  and  it  is  fair  to  assume  that 
his  work  on  this  commission  was  in  large  part  responsible  for 
his  seeing  the  importance  of  providing  for  a  budgetary  system 
for  the  state  and  of  taking,  steps  for  its  adoption. 

A  reading  of  the  Lodge  act,  taken  in  connection  with  the 
reform  accomplished  and  in  progress  for  the  reorganization  of 
the  administrative  services  of  the  government  upon  a  depart- 
mental basis,  shows  that  the  state  of  New  Jersey  has  gone  a 
long  way  towards  the  adoption  of  a  budgetary  system  of  finan- 
cial administration.  It  has  definitely  provided  for  an  execu- 
tively formulated  budget.  Upon  the  Governor  has  been 
placed  the  full  responsibility  of  presenting  to  the  legislature  a 
consolidated  statement  of  the  provision  which,  in  his  opinon, 

1  Fourth  Report  of  the  Commission  upon  the  Reorganization  and 
Consolidation  of  the  Different  Departments  of  the  State  Government 
(The  Economy  and  Efficiency  Commission),  1916,  p.  5. 

66 


BUDGETARY  LEGISLATION 

should  be  made  for  support  of  the  government  during  the 
year.  He  is  required  at  the  same  time  to  submit  statement? 
compiled  by  the  comptroller  in  the  form  directed  by  him,  show- 
ing revenue  and  expenditures  for  the  last  completed  year, 
estimated  revenues  and  expenditures  for  the  year  in  progress 
in  comparison  with  his  estimates  for  the  year  to  be  financed. 
Careful  provision  is  made  for  the  assistance  required  by  him 
in  making  his  investigations  of  the  needs  of  the  several  serv- 
ices and  in  subjecting  the  estimates  as  prepared  by  such  serv- 
ices to  scrutiny  and  revision.  Especially  noteworthy  are  the 
provisions  that  all  appropriations  shall  be  made  in  a  single  ap- 
propriation bill  and  that  flexibility  in  the  expenditure  of  ap- 
propriations may  be  had  through  the  effecting  of  transfers 
from  one  appropriation  head  to  another  upon  the  approval  of 
the  State  House  Commission  being  obtained. 

It  will  be  noted,  however,  that  the  program  of  reform 
stops  at  this  point,  and  that  no  attempt  is  made  to  restrict 
the  right  of  the  legislature  to  amend  the  budget  as  submitted 
by  the  Governor.  In  this  field  of  legislative  procedure  two 
important  points  have,  however,  been  attained ;  that  all  appro- 
priation proposals  will  be  considered  by  a  single  joint  com- 
mittee on  appropriations  of  the  two  houses;  and  that  all  ap- 
propriations will  be  made  in  a  single  bill.  Finally,  it  will  be 
borne  in  mind  that  the  Governor  has  the  additional  control 
over  appropriations  resulting  from  his  power  to  veto  specific 
items  in  the  appropriation  bill,  subject,  however,  to  the  power 
to  provide  such  vetoes  by  a  two-thirds  vote. 

Following  is  a  copy  of  this  important  measure: 

An  Act  to  provide  a  budget  system  and  to  provide  a  method 
of  ascertaining  the  financial  condition  of  the  State  and  the 
appropriations  necessary  for  the  various  departments,  insti- 
tutions and  other  agencies  of  the  State.  Approved  March  I, 
1916.  (Acts  of  1916,  Chapter  15.) 

Section  i.     The  short  title  of  this  act  is  the  "Budget  Act." 

Sec.  2.     Each  department  of  the  State  government,  board, 

commission,  charitable  or  correctional  institution,  or  any  other 


BUDGETARY  REFORM  IN  THE  STATES 

State  Agency,  requiring  an  annual  appropriation  from  the 
State,  shall  present  a  request  therefor  to  the  Governor  on  or 
before  November  fifteenth  of  each  year.  Any  organization, 
body,  committee  or  person  intending  to  request  an  appropria- 
tion from  the  Legislature  for  any  particular  object  or  purpose 
or  for  any  new  annual  expenditure,  shall  likewise  present  such 
request  to  the  Governor  on  or  before  November  fifteenth. 

Sec.  3.  Such  requests  shall  be  made  by  the  head  of  such 
department,  president  or  chairman  of  such  board  or  commis- 
sion, or  officer  designated  by  the  board  of  managers  or  other 
governing  body  of  such  charitable  or  correctional  institution, 
or  other  State  agency.  In  the  case  of  the  judiciary,  it  shall  be 
made  by  the  Clerk  of  the  Court  of  Errors  and  Appeals,  under 
the  direction  of  the  Chancellor  and  the  Chief  Justice  of  the 
Supreme  Court,  and  in  the  case  of  the  Legislature,  by  the 
Clerk  of  the  House  of  Assembly  and  the  Secretary  of  the  Sen- 
ate. In  the  case  of  any  organization,  body,  committee  or  per- 
son as  mentioned  in  paragraph  two,  the  request  shall  be  made 
by  some  person  duly  authorized  therefor. 

Sec.  4.  Such  requests  shall  be  made  upon  blank  forms  to 
be  furnished  by  the  Comptroller  as  approved  by  the  Governor. 
The  blank  forms  shall  be  filled  in  according  to  the  rules  at- 
tached hereto.  The  rules  may  be  altered  or  amended,  or  new 
rules  adopted  by  the  Governor  or  the  Joint  Appropriation 
Committee  of  the  Legislature  from  time  to  time  as  conditions 
may  require. 

Sec.  5.  All  such  requests  for  appropriation  shall  show  in 
detail  the  purposes  for  which  appropriations  are  requested,  and 
where  increases  or  decreases  from  previous  appropriations  are 
desired  the  reason  therefor.  Such  requests  shall  be  sworn  to 
by  the  person  making  the  same,  which  oath  shall  be  in  the 
form  provided  by  rule. 

Sec.  6.  There  shall  accompany  such  requests  for  appro- 
priations a  trial  balance  covering  the  preceding  fiscal  year, 
showing  the  receipts  and  expenditures  of  the  department  or 
body  presenting  such  request  in  such  form  and  detail  as  the 
Governor  may  direct. 

Sec.  7.  On  November  fifteenth  of  each  year,  and  thereafter 
as  required,  the  Comptroller  and  State  Treasurer  shall  jointly 
transmit  to  the  Governor,  in  such  form  as  he  shall  direct,  a 
summary  of  the  financial  condition  of  the  State.  This  report 
shall  show,  in  condensed  form,  the  financial  condition  of  the 

68 


BUDGETARY  LEGISLATION 

State  for  the  fiscal  year  ending  October  thirty-first  preceding, 
the  amounts  expended  and  the  amounts  received,  the  sources 
and  amounts  of  income,  and  the  free  balance  in  the  treasury. 
He  shall  also  furnish  similar  information,  as  nearly  as  the 
same  can  be  ascertained,  for  the  current  year.  The  report 
shall  likewise  show  the  probable  sources  of  revenue  and  the 
probable  estimate  of  the  State's  income  available  for  appro- 
priations for  the  next  fiscal  year  for  which  the  Legislature 
will  be  requested  to  make  appropriations. 

Sec.  8.  Upon  the  receipt  of  requests  for  appropriations 
and  the  report  of  the  Treasurer  and  Comptroller,  the  Gov- 
ernor shall  proceed  to  examine  such  requests  and  reports  for 
the  purpose  of  determining  the  necessity  of  the  appropriations 
so  requested  and  shall  in  a  separate  message  transmit  to  the 
Legislature  on  the  second  Tuesday  in  January  a  summary  of 
such  requests  and  reports,  together  with  his  recommendations 
thereon. 

Sec.  9.  For  the  purpose  of  investigating  the  necessity  of 
the  appropriations  so  requested  or  for  the  purpose  of  ascer- 
taining if  either  new  sources  of  income  are  required  or  pres- 
ent sources  of  income  are  properly  collected  or  for  any  simi- 
lar purpose,  at  any  time,  the  Governor  may  summon  witnesses 
and  conduct  hearings  or  appoint  any  officer  of  the  State  gov- 
ernment or  any  other  person  particularly  fitted  therefor  to 
conduct  any  investigation  or  examination  necessary  to  aid  him 
in  this  purpose.  Should  the  additional  duties  imposed  upon 
the  Governor  by  this  act  require  further  assistants,  the  Gov- 
ernor shall  have  power  to  appoint  officers  of  the  State  gov- 
ernment, together  with  not  more  than  two  special  assistants,  to 
form  a  permanent  committee,  acting  with  him  in  carrying  out 
the  provisions  of  this  act. 

Sec.  10.  The  message  of  the  Governor  shall  be  in  such 
form  that  it  can  be  easily  understood  by  the  average  citizen, 
and  shall  be  printed  and  a  copy  thereof  presented  to  each 
member  of  the  Legislature,  the  press,  each  public  library,  and 
given  such  other  publicity  as  the  Governor  or  the  Joint  Ap- 
propriation Committee  shall  deem  wise. 

Sec.  IT.  The  Governor  shall  not  recommend  to  the  Legis- 
lature appropriations  in  excess  of  the  anticipated  revenue. 
Should  he  believe  that  additional  appropriations  are  necessary, 
he  shall,  if  he  deems  it  advisable,  suggest  plans  for  raising 
sufficient  revenue  to  meet  such  appropriations. 

aeWF-"'- 


BUDGETARY  REFORM  IN  THE  STATES 

Sec.  12.  If  he  deems  it  necessary,  the  Governor  may  from 
time  to  time  transmit  special  messages  requesting  additional 
appropriations  for  purposes  not  anticipated  at  the  time  the 
budget  message  was  transmitted  to  the  Legislature. 

Sec.  13.  No  money  shall  be  drawn  from  the  treasury  ex- 
cept by  the  General  Appropriation  Bill,  and  it  is  the  intent  of 
this  act  that  no  supplemental,  deficiency  or  incidental  bill  shall 
be  considered. 

Sec.  14.  Whenever  any  act  creating  or  regulating  any 
body,  mentioned  in  paragraph  two,  shall,  limit  the  amount 
which  such  body  may  expend,  such  act  shall  be  deemed  to  be 
repealed  in  so  far  as  such  limit  is  concerned  if  a  greater 
amount  is  appropriated  by  any  succeeding  Legislature  to  the 
extent  only  of  such  greater  amount. 

Sec.  15.  In  order  that  some  degree  of  flexibility  in  appro- 
priations may  be  had,  any  department  or  other  State  agency 
receiving  an  appropriation  by  any  future  act  of  the  Legisla- 
ture may  apply  to  the  State  House  Commission  for  leave  to 
transfer  a  part  of  any  item  granted  to  such  department  or 
agency  to  any  other  item  in  such  appropriation.  Such  appli- 
cation shall  only  be  made  during  the  current  year  for  which 
the  appropriation  was  made,  and  if  the  State  House  Commis- 
sion shall  consent  thereto,  it  shall  notify  the  Comptroller  there- 
of in  writing,  whereupon  the  Comptroller  shall  place  the 
amount  so  transferred  to  the  credit  of  the  item  so  designated ; 
provided,  however,  that  no  sum  appropriated  for  any  perma- 
nent improvement  shall  be  used  for  maintenance  or  for  any 
temporary  purpose. 

Sec.  1 6.  Any  department  of  the  State  government,  board, 
commission,  charitable  or  correctional  institution,  or  any  other 
State  agency  which  derives  its  income  in  part  or  in  whole  from 
fees,  licenses,  taxes,  penalties,  or  in  any  manner,  by  reason 
of  any  law  whereby  such  income  is  paid  directly  to  such  body 
for  its  support  and  not  by  appropriation  from  the  State  treas- 
ury, shall,  upon  request  of  the  Governor,  supply  information 
concerning  such  income  and  the  expenditure  thereof  either  in 
the  form  required  for  appropriations  or  in  any  other  form 
which  he  may  direct,  and  the  Governor  shall  have  the  same 
powers  of  investigation  over  such  bodies  as  over  other  bodies 
requesting  appropriations  under  this  act. 

Sec.  17.  The  expense  of  conducting  any  investigation  au- 
thorized in  this  act  may  be  drawn  from  either  a  special  ap- 

70 


BUDGETARY  LEGISLATION 

propriation  made  for  this  purpose  or  from  the  Governor's 
emergency  fund.  Such  expenses  shall  be  paid  upon  the  cer- 
tificate of  the  Governor. 

Sec.  1 8.  This  act  shall  be  liberally  construed,  and  if  any 
section  thereof  shall  be  declared  unconstitutional  by  any  court 
of  competent  jurisdiction,  it  shall  not  thereby  affect  any  other 
section  thereof. 

Sec.  19.  This  act  shall  take  effect  October  first,  one  thou- 
sand nine  hundred  and  sixteen. 

RULES 

1.  All  requests   for  appropriations  shall  be  upon  blanks 
furnished  by  the  Comptroller  according  to  forms  approved 
by  the  Governor.     Such  blanks  .shall  be  called  appropriation 
budget  blanks. 

2.  They  shall  be  addressed  to  the  Governor  and  General 
Appropriation  Committee  of  the  next  ensuing  Legislature. 

3.  They  shall  cite  the  laws  under  which  the  appropriation 
is  authorized. 

4.  They  shall  show  the  total  number  of  employees  for  the 
preceding  fiscal  year,  the  current  fiscal  year  and  the  estimated 
number  for  the  coming  year  for  which  the  appropriation  is 
asked ;  likewise  in  charitable  and  correctional  institutions,  the 
number  of  inmates,  the  costs  of  maintenance  per  capita,  and 
the  costs  of  administration  and  salary  per  capita  for  the  same 
periods. 

5.  They  shall  show  the  estimated  value  of  the  property 
under  the  control  of  the  department  or  body  requesting  the 
appropriation  and  the  amount  contributed  thereto  by  the  State. 
Also  the  amount  of  revenue  earned  and  how  much,  if  any, 
thereof  is  paid  directly  into  the  State  Treasury. 

6.  They  shall  show  in  parallel  columns  opposite  each  item 
the  amount  appropriated  for  the  last  fiscal  year,  the  present 
year  and  the  amount  required  for  the  next  year. 

7.  The  items  shall,  as  far  as  practical,  be  divided  as  fol- 
lows: 

(a)  Maintenance  (i)   food;  (2)  clothing;  (3)   fuel  and 
power;  (4)  supplies;  (5)  incidentals. 

(b)  Salaries  (give  number  and  classification  of  employees 
and  salaries). 

(c)  Repairs  and  replacements  (give  details). 


BUDGETARY  REFORM  IN  THE  STATES 

(d)  Miscellaneous  (including  equipment,  insurance,  fixed 
charges,  etc.) 

(e)  New  buildings  (give  details). 

8.  Whenever  an  increase  in  an  item  is  asked  over  the  pre- 
vious year,  it  shall  be  underlined  in  red  ink  and  the  reason  for 
such  increase  given. 

Ohio.  In  Ohio  the  principle  of  an  executively  formulated 
budget  was  firmly  established  in  1913  by  the  passage  of  the 
act  entitled  "An  Act  to  Establish  a  Budget  System  for  State 
Officers,  Departments  and  Institutions,"  approved  May  6, 


Under  the  system  which  formerly  prevailed  in  this  state  the 
heads  of  departments,  boards  and  commissions  were  requested 
to  submit  to  the  Auditor  of  State,  upon  blanks  furnished  by 
him,  their  estimates  of  funds  necessary  to  run  their  depart- 
ments until  the  next  biennium.  These  requests  were  then  re- 
turned to  the  Auditor  of  State,  who  tabulated  their  wants  and 
submitted  them  without  comment  to  the  incoming  legislature. 
Hearings  before  the  finance  committee  of  the  house  were  held 
behind  locked  doors  and  drawn  blinds,  and  the  men  who  were 
the  best  talkers  got  the  most  money.  It  was  not  a  case  of  need 
so  much  as  it  was  a  case  of  "you  scratch  my  back  and  I  will 
scratch  yours."1 

Another  evil  of  the  old  system  was  that  : 

The  old  appropriation  bills,  because  of  the  appropriations  of 
"Receipts  and  Balances"  year  after  year,  were  absolutely  be- 
yond the  comprehension  of  any  person  who  tried  to  digest  or 
analyze  the  financial  acts  of  the  session.  In  fact  with  these 
words  appearing  in  the  bill  no  one  knew  how  much  money 
was  being  voted  from  the  state  treasury. 

In  other  respects  the  whole  system  of  state  financing  was 
similar  to  that  prevailing  in  other  states  and  possessed  all  or 
nearly  all  of  their  defects.  It  was  to  remedy  these  defects,  in 
part  at  least,  that  the  act  above  mentioned  was  passed. 

1  State  Budget  Making  in  Ohio,  by  W.  O.  Heffernan,  Ex-Budget 
Commissioner  of  Ohio.  Annals  of  the  American  Academy  of  Politi- 
cal and  Social  Science,  Nov.,  1915,  pp.  94  and  96. 

72 


BUDGETARY  LEGISLATION 

This  act  does  two  things :  it  provides  for  the  submission  to 
the  legislature  by  the  Governor  of  a  budget  and  it  authorizes 
the  Governor  to  employ  competent  help  to  assist  him  in  de- 
termining the  needs  of  the  departments  and  institutions  of  the 
state  and  in  formulating  the  budget. 

In  pursuance  of  the  latter  power  Governor  Cox  created  the 
office  of  budget  commissioner,  and  entrusted  to  the  com- 
missioner appointed  by  him  the  task  of  preparing  the  first 
budget,  that  for  1914.  The  difficulties  encountered  by  this 
official  and  the  steps  taken  by  him  in  meeting  these  difficulties 
are  interestingly  described  by  the  commissioner  in  a  paper 
prepared  by  him  on  that  subject,  from  which  liberal  quotations 
will  be  made.1 

The  information,  or  rather  the  statements,  which  the  Aud- 
itor was  supposed  to  furnish  were  very  unsatisfactory.  It 
took  weeks  and  months  to  get  them  because  there  were  no 
available  records  in  the  Auditor's  Office  from  which  figures 
for  purposes  of  comparison  could  be  taken.  In  other  words 
there  were  no  comparative  records  kept  up  to  the  time  of  the 
installation  of  the  budget  system.  *  *  * 

So  long  as  there  were  no  figures  available  for  comparison 
with  previous  years  the  adoption  of  a  system  of  classified  ex- 
penditures without  which  there  could  be  no  budget,  was  pre- 
vented. Under  the  old  regime  the  legislature  usually  had  be- 
fore it  in  considering  financial  matters  only  the  ex  parte 
testimony  of  interested  persons,  whose  statements  and  statis- 
tics in  support  of  their  alleged  needs  it  was  nobody's  business 
to  examine  critically,  and  which,  in  the  absence  of  reliable  and 
exact  information,  could  not  be  readily  refuted. 

I  found  nothing  of  immediate  value  in  the  state  reports. 
The  obvious  lack  in  these  reports  was  as  follows : 

i.  Improper  classifications  and  segregation  of  accounts  for 
the  purpose  of  reporting  financial  transactions  of  the  depart- 


ment. 


2.     Inadequate  classifications  by  objects  of  expenditure 


"State  Budget  Making  in  Ohio,  by  W.  O.  Heffernan,  Ex-Bu 
Commissioner  of  Ohio.    Annals  of  the  American  Academy  of  Politi- 
cal and  Social  Science,  Nov.,  1915. 

73 


•  / 

dget 


BUDGETARY  REFORM  IN  THE  STATES 

3.  Amounts  of  expenditures  for  specific  objects  are  specifi- 
cally classified. 

4.  Amounts  showing  expenditures  by  objects  containing 
amounts  representing  inventory  on  hand. 

5.  Amounts  of  expenditure  shown  in  report  containing 
amounts  and  specific  appropriations,  which  unbalanced  any 
comparison  which  one  might  wish  to  make. 

This  statement  is  of  interest  as  emphasizing  the  point  that 
no  budgetary  system  can  be  successfully  operated  that  does 
not  rest  squarely  upon  a  system  of  accounting  and  reporting 
specially  devised  to  produce  the  information  required  for  bud- 
getary purposes.  In  the  case  of  Ohio  it  was  fortunate  that 
the  law  defining  the  duties  of  the  state  auditor  gave  to  that 
official  full  power  to  prescribe  such  system  of  accounting  and 
reporting  by  state  departments  and  institutions  as  he  deemed 
desirable.  Sections  274  and  277  of  the  General  Code  of  the 
state  thus  reads : 

Sec.  274.  There  shall  be  a  bureau  of  inspection  and  super- 
vision of  public  offices  in  the  department  of  Auditor  of  State 
which  shall  have  power  as  hereinafter  provided  in  sections 
two  hundred  seventy-five  to  two  hundred  eighty-nine,  inclu- 
sive, to  inspect  and  supervise  the  accounts  and  reports  of  all 
state  offices,  including  every  state  educational,  benevolent, 
penal  and  reformatory  institution,  public  institution  and  the 
offices  of  each  taxing  district  or  public  institution  in  the  State 
of  Ohio.  Said  bureau  shall  have  the  power  to  examine  the 
accounts  of  every  private  institution,  association,  board  or 
corporation  receiving  public  money  for  its  use  and  purpose, 
and  may  require  of  them  annual  reports  in  such  form  as  it 
may  prescribe.  The  expense  of  such  examination  shall  be 
borne  by  the  taxing  district  providing  such  public  money.  By 
virtue  of  his  office  the  Auditor  of  State  shall  be  chief  inspector 
and  supervisor  of  public  offices,  and  as  such  appoint  not  ex- 
ceeding two  deputy  inspectors  and  supervisors  and  a  clerk. 
Not  more  than  one  deputy  inspector  and  supervisor  shall  be- 
long to  the  same  political  party. 

Sec.  277.  The  Auditor  of  State,  as  chief  inspector  and 
supervisor,  shall  prescribe  and  install  a  system  of  accounting 
and  reporting  for  public  offices.  Such  system  shall  be  uniform 

74 


BUDGETARY  LEGISLATION 

in  its  application  to  offices  of  the  same  grade  and  accounts 
of  the  same  class,  and  shall  prescribe  the  form  of  receipt, 
vouchers  and  documents,  required  to  separate  and  verify  each 
transaction,  and  forms  of  reports  and  statements  required  for 
the  administration  of  such  offices  or  for  the  information  of 
the  public. 

In  pursuance  of  the  powers  thus  vested  in  him  the  state 
auditor,  acting  in  cooperation  with  the  Budget  Commission, 
worked  out  and  prescribed  a  system  of  accounting  that  will 
furnish  the  information  regarding  expenditures  in  an  excep- 
tionally satisfactory  manner.  This  system  is  thus  described 
by  the  Director  of  the  Ohio  Institute  for  Public  Efficiency.1 

In  order  that  the  expenditures  chargeable  to  the  govern- 
mental functions  or  organization  units  may  exhibit  the  infor- 
mation desired  for  administrative,  statistical  and  other  pur- 
poses, the  expenditures  are  classified  according  to  character 
of  transaction  and  subclassified  according  to  objects  of  ex- 
penditure. 

Under  each  function  or  organization  unit,  the  following 
captions  denoting  character  of  transaction  are  employed,  the 
figures  at  the  left  of  each  serving  as  a  code  designation : 

000  Operation 

100  Maintenance  of  Lands 

200  Maintenance  of  Structures  and  Improvements 

300  Maintenance  of  Equipment 

400  Contingent 

450  Debt  Service 

500  Outlay  for  Lands 

600  Outlay  for  Structures  and  Improvements 

700  Outlay  for  Equipment 

990  Refunds 

Under  each  of  the  accounts  in  the  above  classification,  in 
order  that  the  object  of  expenditure  may  be  denoted  and  sep- 
arately charged  under  a  specific  caption,  the  following  group 

1  The  Budget  and  the  Legislature,  by  Rufus  E.  Miles,  Director  of 
the  Ohio  Institute  for  Public  Efficiency.     Annals  of  the  American 
Academy  of  Political  and  Social  Science.    Nov.,  1915,  p.  41. 

75 


BUDGETARY  REFORM  IN  THE  STATES 

of  accounts  may  be  used.    The  letters  at  the  left  of  each  serve 
as  a  code  designation: 

A.  Personal  Service 

B.  Supplies  and  Materials 

C.  Contractual  Services 

D.  Contributions,  Gratuities  and  Awards 

Suitable  subdivisions  in  detail  are  provided  for  each  of  the 
accounts,  but  can  not  be  given  here  for  lack  of  space. 

The  development  of  this  system  of  accounting  is  of  special 
importance  since  it  shows  that  the  authorities  in  Ohio  responsi- 
ble for  the  administration  of  the  finances  of  the  state  have 
a  clear  appreciation  of  the  technical  requirements  of  a  proper 
budgetary  system  and  are  actively  at  work  meeting  them.  It 
will  further  be  seen  how  closely  this  scheme  of  accounting  cor- 
responds in  principle,  though  it  differs  in  detail,  to  the  system 
of  accounting  described  by  the  author  in  his  paper  on  the 
nature  and  functions  of  a  budget,  as  an  essential  feature  of  a 
proper  budgetary  system. 

Another  feature  of  the  budgetary  experience  of  Ohio  that 
merits  special  attention  is  the  steps  taken  to  meet  the  problems 
of  determining  the  extent  to  which  appropriation  grants  should 
be  itemized.  This  is  a  feature  of  budgetary  practice  which, 
it  will  be  remembered,  received  detailed  attention  in  our  paper 
on  the  Nature  and  Functions  of  a  Budget  and  in  the  chapter 
dealing  with  the  necessity  for  an  allotment  system.  The 
problem  presented,  as  there  described,  is  that  of  harmonizing 
legislative  control  with  administrative  discretion  or  flexibility" 
in  the  expenditure  of  funds  so  that  uniform  contingencies  and 
needs  may  be  properly  met.  In  Ohio,  as  in  most  states,  no 
consistent  plan  had  been  worked  out  or  followed  for  meeting 
this  problem.  In  some  cases  appropriations  were  made  in 
lump  sums  and  in  other  cases  with  great  detail  of  specification. 
That  this  problem  was  fully  appreciated  by  the  budget  com- 
missioner is  shown  by  the  following  remarks  by  him  in  the 
paper  from  which  previous  quotations  have  been  taken. 


BUDGETARY  LEGISLATION 

All  of  the  house  appropriations  were  made  in  two  ways, 
either  in  lump  or  inflexible  specific  appropriations.  The  lump- 
sum  scheme  seems  to  have  predominated  in  appropriations  dur- 
ing the  last  decade,  though  many  examples  of  specific  appro- 
priations occurred  during  this  period.  A  thoroughly  efficient 
and  honest  administrative  official  can  oftentimes  get  better 
results  if  he  has  a  free  hand  in  the  use  of  funds,  and  circum- 
stances sometimes  arise  which  make  it  desirable  to  use  funds 
for  purposes  which  the  legislature  could  not  foresee.  But, 
on  the  other  hand,  the  same  kind  of  an  appropriation  in  the 
hands  of  dishonest  or  incompetent  officials  is  so  easily  mis- 
used that  it  has  proven  generally  unsatisfactory  and  often 
vicious.  Specific  appropriations  were  the  natural  ends  to- 
wards which  legislative  bodies  reacted  after  having  found  the 
lump  sum  inadequate.  The  fact  that  the  money  appropriated 
specifically  could  be  used  for  no  other  purposes  and  no  other 
money  was  available,  made  it  necessary  to  allow  a  wide  margin 
for  any  contingency  that  might  arise.  Usually  the  maximum 
amounts  provided  were  not  required,  but  the  official  thinking 
that  he  must  allow  the  money  to  lapse  or  spend  it  for  the  pur- 
poses specified,  was  able  to  be  too  free  in  spending. 

It  would  be  difficult  to  state  this  problem  and  the  consid- 
erations involved  in  it  more  effectively  than  has  been  done  in 
the  passage  just  quoted.  The  budget  commissioner  has  sought 
to  solve  this  problem  by  making  provision  for  a  system  of 
transfer  between  appropriation  items  upon  the  plan  followed 
by  Great  Britain.  For  this  purpose  use  was  made  of  an  ex- 
isting state  institution  known  as  the  Emergency  Board,  con- 
sisting of  the  Governor,  the  state  auditor,  the  attorney  general, 
and  the  chairmen  of  the  finance  committees  of  both  houses  of 
the  legislature,  any  four  of  whom  were  empowered  by  the 
statutes  to  make  deficiency  appropriations. 

The  steps  actually  taken  by  the  budget  commissioner  to  in- 
troduce this  system  of  "virement,"  as  it  is  technically  called 
in  Great  Britain,  are  thus  described  by  this  official: 

Not  until  the  budget  was  established  in  1914  was  any  at- 
tempt made  to  combine  the  virtues  of  the  two  systems  and 
eliminate  their  vices.  In  order  to  avoid  the  evils  of  both  lump- 

77 


BUDGETARY  REFORM  IN  THE  STATES 

sum  and  specific  appropriations,  appropriations  were  made 
specifically  but  were  provided  with  the  necessary  degree  of 
flexibility.  This  was  done  by  means  of  the  transfer  system 
which  made  it  possible  to  appropriate,  instead  of  maximum 
estimates,  those  slightly  above  the  minimum.  Provided  with 
the  privilege  of  transfer,  departmental  officials  could  reduce 
their  estimates  on  each  item  knowing  that  according  to  the 
"laws  of  probability"  all  projects  would  not  cost  the  maximum, 
and  that  the  small  margin  of  safety  could  be  transferred  from 
those  which  cost  the  minimum  to  the  few  that  actually  ap- 
proach the  maximum.  The  result  of  following  this  plan  was 
economy  and  smaller  appropriations  for  specific  items,  and 
in  consequence  a  smaller  budget.  Along  with  this  a  check 
was  provided  on  expenditures  for  the  reason  that  the  request 
for  a  transfer  invited  investigation  by  the  Emergency  Board, 
and  required  a  statement  of  explicit  reasons  why  the  fund  to 
which  transfer  was  sought  was  not  adequate. 

Notwithstanding  the  great  advance  made  in  perfecting  the 
system  of  an  executively  formulated  budget,  it  would  appear 
that  the  first  budget  presented  did  not  succeed  in  its  purpose 
of  keeping  down  expenditures.  The  total  of  estimates  for  the 
biennial  period  ending  January  31,  1917,  as  prepared  by  the 
spending  departments,  was  in  round  numbers  $50,028,000. 
The  budget  cut  this  dotwn  to  $39,927,000.  The  total  actually 
appropriated  was  $46,298,000.  The  reason  for  this  failure  on 
the  part  of  the  budget  to  keep  appropriations  more  within 
bounds  was  not  due  wholly  to  the  fact  that  the  budgetary 
system,  as  established,  deals  only  with  the  problem  of  formu- 
lating a  budget  and  imposes  no  restriction  upon  the  legislature 
in  acting  upon  its  proposals.  According  to  the  "Bulletin  on 
State  Budget  System  in  the  United  States,"  prepared  for  the 
Massachusetts  Constitutional  Convention,  1917,  the  mistake 
was  made  of  having  the  budget  go  forward  as  one  prepared 
by  the  budget  commissioner  rather  than  one  prepared  by  that 
official  for  the  Governor.  This  criticism  emphasizes  the  fact 
that  the  mere  preparation  of  a  budgetary  document  in  proper 
form  is  not  sufficient.  It  must  be  not  only  nominally  but  actu- 
ally the  act  of  the  chief  executive.  It  must  have  back  of  it 


BUDGETARY  LEGISLATION 

all  the  authority  of  that  official  and  must  show  clearly  that  it 
represents  his  judgment,  found  after  adequate  study  of  the 
needs  of  the  several  services,  regarding  the  sums  that  should 
be  voted.  This  initial  error,  it  is  stated,  was  recognized  by 
Governor  Cox  and  has  been  corrected  in  the  case  of  the  budget 
submitted  this  year. 

The  following  is  the  text  of  the  budget  act  : 

An  Act  to  establish  a  budget  system  for  state  officers,  depart- 
ments and  institutions.    Approved  May  6,  1913.     (Acts  of 


Section  i.  On  or  before  the  fifteenth  day  of  November, 
biennially,  in  the  even  numbered  years,  the  several  depart- 
ments, institutions,  commissions  and  officers  of  the  state  shall 
report  on  blanks  furnished  for  such  purpose,  an  estimate  in 
itemized  form  to  the  governor,  stating  the  amount  of  money 
needed  for  their  wants  for  the  biennial  period  beginning  with 
the  first  day  of  July  thereafter. 

Sec.  2.  On  or  before  the  fifteenth  day  of  November  bien- 
nially in  the  even  numbered  years  the  auditor  of  state  shall 
furnish  to  the  governor  the  following  statements  : 

1.  A  statement  showing  the  balance  standing  to  the  credit 
of  the  several  appropriations  for  each  department,  institution, 
commission  and  office  of  the  state,  and  for  each  and  every  cur- 
rent purpose  of  the  state  government,  at  the  end  of  the  last 
fiscal  year. 

2.  A  statement  showing  monthly  revenues  and  expendi- 
tures from  each  appropriation  account  in  the  twelve  months, 
and  the  monthly  revenues  and  expenditures  from  all  the  ap- 
propriation accounts  in  the  twelve  months  of  the  last  fiscal 
year. 

3.  A  statement  showing  the  annual  revenues  and  expendi- 
tures of  each  appropriation  account  for  each  year  of  the  last 
four  fiscal  years  in  which  any  appropriation  account  has  ex- 
isted. 

4.  A  statement  showing  the  monthly  average  of  such  ex- 
penditures from  each  of  the  several  appropriation  accounts 
for  the  last  fiscal  year,  and  also  the  total  monthly  average  from 
all  of  them  for  the  last  four  fiscal  years. 

Sec.  3.  The  departments,  institutions,  commissions  and 
officers  of  the  state  upon  request  shall  forthwith  furnish  to  the 

79 


BUDGETARY  REFORM  IN  THE  STATES 

governor  any  information  desired  in  relation  to  the  affairs  of 
their  respective  departments,  institutions  or  officers. 

Sec.  4.  At  the  beginning  of  each  regular  session  of  the 
general  assembly  the  governor  shall  submit  to  the  general  as- 
sembly, together  with  the  estimate  of  such  departments,  insti- 
tutions, commissions  and  officers  of  the  state,  his  budget  of 
current  expenses  of  the  state  for  the  biennial  period  beginning 
on  the  first  day  of  July  next  thereafter. 

Sec.  5.  At  any  time  the  governor  may  appoint  competent, 
disinterested  persons  to  examine,  without  notice,  the  affairs 
of  any  department,  institution,  public  works,  commission  or 
office  of  the  state  for  the  purpose  of  ascertaining  facts,  and 
to  make  findings  and  recommendations  relative  to  increasing 
the  efficiency  and  curtailing  the  expense  therein.  In  con- 
nection with  such  examinations,  the  governor  or  such  ap- 
pointees may  compel  attendance  and  testimony  of  witnesses, 
administer  oaths  and  examine  such  persons  as  they  deem  nec- 
essary, and  compel  the  production  of  books  and  papers.  The 
orders  and  subpoenas  issued  by  the  governor  or  by  such  ap- 
pointees in  pursuance  of  the  authority  in  them  vested  by  the 
provisions  of  this  section  may  be  enforced,  on  the  application 
of  the  governor,  by  any  court  of  common  pleas  by  proceed- 
ings in  contempt  therein  as  provided  by  law.  The  governor 
may  fix  the  compensation  of  such  appointees  or  any  of  them 
and  cause  the  same  together  with  their  necessary  traveling  ex- 
penses to  be  paid  out  of  any  appropriation  made  by  the  gen- 
eral assembly  for  the  executive  department. 

The  sections  of  the  General  Code  providing  for  the  Emer- 
gency Board  are  as  follows : 

An  Act  creating  an  Emergency  Board  and  defining  its  duties. 
(General  Code  of  Ohio,  1910,  Title  VIII,  Chapter  i,  sec- 
tions 2312  and  2313.) 

Section  2312.  There  shall  be  an  emergency  board  to  con- 
sist of  the  governor,  auditor  of  state,  attorney  general,  chair- 
man of  the  senate  finance  committee  and  chairman  of  the  house 
finance  committee,  which  board  may  authorize  deficiencies  to 
be  made.  The  governor  shall  be  president,  and  the  chairman 
of  the  house  finance  committee  shall  be  secretary  of  the  board. 
The  secretary  shall  keep  a  complete  record  of  all  its  proceed- 
ings. The  necessary  expenses  of  the  chairman  of  the  senate 
and  house  finance  committees,  while  engaged  in  their  duties  as 
such  members,  shall  be  paid  from  the  fund  for  expenses  of 

80 


BUDGETARY  LEGISLATION 

legislative  committees,  upon  itemized  vouchers  approved  by 
themselves,  and  the  auditor  of  state  is  hereby  authorized  to 
draw  his  warrant  upon  the  treasurer  of  state  therefor.  (89  v. 
407  Sec.  3.) 

Sec.  2313.  In  case  of  an  emergency  requiring  the  expendi- 
ture of  a  greater  sum  than  the  amount  appropriated  by  the 
general  assembly  for  an  institution  or  department  of  the  state 
in  any  one  year,  or  for  the  expenditure  of  money  not  specifi- 
cally provided  for  by  law,  the  trustees,  managers,  directors 
or  superintendent  of  such  institution,  or  the  officers  of  such 
department,  may  make  application  to  the  board  for  authority 
to  create  a  deficiency,  or  to  expend  money  not  specifically  pro- 
vided for  by  law.  Such  officer  shall  fully  set  forth  to  the  sec- 
retary in  writing  the  facts  in  connection  with  the  case.  As 
soon  as  can  be  done  conveniently,  the  secretary  shall  arrange 
for  a  meeting  of  the  board,  and  shall  notify  such  officer  of  the 
time  and  place  of  the  meeting,  and  request  his  presence.  No 
permit  shall  be  granted  with  the  approval  of  less  than  four 
members  of  the  board,  who  shall  sign  it.  (89  v.  407  Sec.  3.) 


CHAPTER  V 

BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL 
STATES :  CALIFORNIA,  TENNESSEE 

California.  California  has  secured  a  budgetary  system  not 
as  the  result  of  any  act  having  this  end  specially  in  view  but 
as  an  incidental  feature  of  a  general  movement  for  the  im- 
provement of  methods  of  administration  in  that  common- 
wealth. This  movement  found  tangible  expression  in  the 
creation  in  1911  of  a  body  known  as  the  State  Board  of  Con- 
trol which,  to  quote  the  words  of  Governor  Johnson  of  that 
state,  has  "plenary  powers  over  the  business  and  financial 
affairs  of  the  state."  In  many  respects  this  body  is  one  of 
the  most  interesting  political  institutions  possessed  by  any  state 
of  the  Union.  It  corresponds  very  closely  to  a  bureau  of  gen- 
eral administration  which,  as  we  have  pointed  out  in  our 
analysis  of  the  problem  of  a  national  budget,  constitutes 
such  an  essential  feature  of  a  scientific  budget  system.  It 
indeed  has  a  status  and  functions  not  dissimilar  from  those 
of  the  British  Treasury  in  the  governmental  system  of  that 
country. 

This  board  immediately  upon  its  organization  realized  that 
no  efficient  system  of  administration  could  be  established  that 
did  not  rest  squarely  upon  a  budgetary  basis.  The  conditions 
existing  at  that  time  in  regard  to  the  appropriation  of  funds 
were  those  found  in  most  of  the  states  and  have  been  thus  de- 
scribed by  Mr.  Neylan,  the  chairman  of  the  board.1 

Under  the  old  system  the  legislature  met  and  simultaneously 
the  heads  of  departments  and  institutions  left  their  posts  and 

1  California's  State  Budget,  by  John  Francis  Neylan,  Chairman, 
State  Board  of  Control  of  California,  Annals  of  the  American  Asso- 
ciation of  Political  and  Social  Science,  Nov.,  1915,  pp.  69-72, 


BUDGETARY  LEGISLATION 

traveled  to  Sacramento.  Here  they  stayed  throughout  the 
legislative  session,  begging,  wheedling  and  whining  for  money 
enough  to  properly  transact  the  public  business.  Of  course 
they  promised  jobs  to  friends  of  legislators  in  return  for 
votes ;  of  course  they  promised  to  aid  some  constituent  of  a 
senator  who  happened  to  be  in  the  flour  or  coal  business ;  of 
course  they  neglected  their  work  for  three  months  or  as  much 
longer  as  the  legislature  lasted. 

The  manner  in  which  the  board  met  this  condition  of  af- 
fairs, and  the  results  that  have  flowed  from  its  action,  is  thus 
described  by  Governor  Johnson  of  that  state  in  his  biennial 
message  to  the  legislature  in  1917. 

The  Board  of  Control  conceived  the  idea  that  there  should 
be  some  method  of  determining  in  advance  of  a  legislative 
session  the  amount  and  the  necessity  for  the  various  appropri- 
ations for  the  state  institutions.  The  system  by  which  the 
managers  or  superintendents  of  state  institutions  were  required 
to  dance  attendance  during  a  legislative  session,  log-rolling  to 
obtain  the  highest  possible  appropriation,  was  admittedly  an 
imposition  upon  the  state  and  a  system  distasteful  to  those 
who  desired  to  devote  themselves  wholly  to  the  labors  of  their 
particular  activities.  The  Board  of  Control  devised  the  plan, 
therefore,  of  making  a  budget  for  each  legislature;  and,  al- 
though there  is  no  written  law  upon  the  subject,  by  agreement 
between  the  board  and  the  Executive,  and  by  understanding 
with  the  various  institutions,  the  Board  of  Control  has  its 
hearings  in  conjunction  with  the  controller,  prior  to  the  ses- 
sion of  the  legislature,  the  necessity  for  appropriations  is  pre- 
sented in  evidentiary  fashion  and  then  judicially  determined. 
When  the  legislature  meets,  therefore,  it  finds  the  report  of 
this  budget  and  any  legislator  desiring  accurate  information 
has  but  to  inquire  of  the  Board  of  Control  and  that  accurate 
information  derived  from  the  hearings  held  is  immediately  ac- 
corded. Under  the  old  system  the  state's  funds  were  distrib- 
uted in  proportion  to  the  political  influence  of  the  applicant; 
under  the  budget  system  they  are  distributed  in  accordance 
with  the  needs  of  the  state  departments  and  the  merits  of  the 
governmental  projects. 

This  system  gave  effective  results  on  account  of  the  ef- 
fective working  relations  established  between  the  board  and 

83 


BUDGETARY  REFORM  IN  THE  STATES 

the  governor.  In  point  of  fact  the  Governor  made  the  bud- 
get as  prepared  by  the  board  his  budget.  Thus,  in  1913,  the 
Governor  issued  the  following  pronouncement  when  the  bud- 
get was  submitted  to  the  legislature.  He  said: 

Those  appropriations  which  have  been  studied  and  approved 
by  the  Board  of  Control  and  the  State  Controller,  acting  as  a 
budget  commission,  will  receive  executive  sanction.  Those 
which  have  not  been  approved  by  the  budget  commission  will 
fail.  Of  necessity  no  Governor  could  personally  in  the  time 
at  his  disposal  examine  the  justice  of  all  these  financial  bills. 
Common  sense  demands  a  businesslike  and  scientific  budget. 
We  have  one,  and  mark  well  what  I  tell  you,  the  time  will 
never  come  again  in  your  lifetime  or  mine  in  California  when 
any  politician  will  dare  put  this  government  back  on  the  old 
log-rolling  basis.  *  *  * 

What  actually  took  place  in  the  1913  legislature  is  thus  de- 
scribed by  Mr.  Neylan: 

During  the  1913  session  of  California's  legislature  the  head 
of  each  state  institution  and  department  came  to  Sacramento 
when  called  to  appear  before  the  finance  committee  of  the  sen- 
ate and  ways  and  means  committee  of  the  assembly.  They 
usually  arrived  in  the  afternoon,  appeared  before  the  commit- 
tee in  the  evening  to  answer  any  particular  questions  which  had 
been  raised  on  the  budget  recommendations,  and  left  Sac- 
ramento the  following  morning  for  their  respective  residences. 
No  promises  of  jobs  or  anything  else  were  made  for  the  simple 
reason  that  the  Governor  and  Board  of  Control  had  assumed 
responsibility  for  the  entire  budget  and  the  heads  of  depart- 
ments and  institutions  realized  that  the  securing  of  proper  ap- 
propriations was  no  longer  a  contest  in  trickery  and  ward- 
heeling  strategy. 

The  statement  is  made  that  at  the  1915  session  of  the  legis- 
lature "further  steps  were  taken  to  advance  the  budget  idea, 
and  perfect  the  machinery  of  presenting  it."  The  effective 
work  of  the  Board  of  Control  in  revising  estimates  is  shown 
by  the  fact  that  at  this  session  the  estimates  were  reduced  by 
the  board  from  a  total  of  $17,365,776,  originally  asked  for 


BUDGETARY  LEGISLATION 

by  the  departments  and  institutions  of  the  state,  to  $15,458,- 
200,  while  requests  for  special  appropriations  were  reduced 
from  $11,334,405  to  $3,981,426.  That  this  revision  met  with 
the  approval 'of  the  legislature  is  evidenced  by  the  fact  that 
these  estimates  were  still  further  reduced  by  the  latter  in  the 
amount  of  $34i,2i6.1 

Following  is  a  copy  of  the  act  providing  for  the  establish- 
ment and  operation  of  the  State  Board  of  Control. 

Act  Creating  the  State  Board  of  Control,  Approved  April  3, 
1911.     Acts  of   1911,  Chapter  349. 

Section  i.  Article  XVIII  of  chapter  III  of  an  act  entitled 
"An  act  to  establish  a  Political  Code,"  approved  March  12, 
1872,  is  hereby  repealed. 

Sec.  2.  A  new  article  XVIII  of  chapter  III  of  title  I,  of 
part  III,  of  said  Political  Code,  consisting  of  thirty-eight  sec- 
tions to  be  known  and  numbered  respectively  as  sections  654, 
655>  656,  657,  658,  659,  660,. 661,  662,  663,  664,  665,  666, 
667,  668,  669,  670,  671,  672,  673,  674,  675,  676,  677,  678, 
679,  680,  68 1,  682,  683,  684,  685,  686,  687,  688,  689,  690  and 
691,  is  hereby  enacted  to  read  as  follows: 

Article  XVIII. 

654.  A  state  board  of  control  is  hereby  created  to  consist 
of  three  members  who  shall  be  appointed  by  the  governor  and 
hold  office  at  his  pleasure.  The  governor  shall  designate  the 
chairman  of  such  board  and  shall  fill  vacancies  occurring  from 
any  cause  in  the  membership  thereof.  The  members  of  such 
board  shall  not  engage  in  any  private  business  requiring  their 
personal  attention  between  the  hours  of  nine  o'clock  A.  M. 
and  five  o'clock  P.  M.  of  each  day  excepting  holidays  during 
their  term  of  office.  Before  entering  upon  the  discharge  of 
his  duties  each  member  of  said  board  shall  execute  an  official 
bond  to  the  State  of  California  in  the  penal  sum  of  twenty- 

1  Massachusetts  Constitutional  Convention,  1917,  Bulletin  No.  2, 
State  Budget  System  in  the  United  States,  p.  30.  This  Bulletin  cites 
as  its  authority  a  letter  from  the  State  Controller  of  California  and 
an  address  delivered  by  the  Controller  before  the  National  Tax 
Association  at  San  Francisco  in  1915.  * 

85 


BUDGETARY  REFORM  IN  THE  STATES 

five  thousand  dollars,  conditioned  on  the  faithful  discharge  of 
his  duty  according  to  law  and  shall  take  the  oath  of  office  as 
prescribed  by  this  code  for  state  officers.  The  members  of 
such  board  shall  be  executive  officers  and  each  shall  be  au- 
thorized to  administer  oaths.  The  board  shall  appoint  a  sec- 
retary, three  clerks  and  two  stenographers.  Such  appointees 
shall  be  civil  executive  officers.  The  board  may  also  appoint 
a  messenger. 

655.  The  members  of  the  state  board  of  control  shall  each 
receive  a  salary  of  four  thousand  dollars  per  annum  which 
shall  be  paid  at  the  same  time  and  in  the  same  manner  as  the 
salaries  of  state  officers  are  paid.    The  secretary  shall  receive 
a  salary  of  twenty-four  hundred  dollars  per  annum,  the  clerks 
a  salary  of  eighteen  hundred  dollars  per  annum  each,  the  two 
stenographers  fifteen  hundred  dollars  per  annum  each,  and  the 
messenger  nine  hundred  dollars  per  annum.    The  salaries  of 
all  such  appointees  shall  be  paid  at  the  same  time  and  in  the 
same  manner  as  the  salaries  of  state  officers. 

656.  The  said  board  shall  be  in  session  during  office  hours 
whenever  a  majority  of  the  members  thereof  are  present  at 
its  office  in*  the  state  capitol  and  may  meet  at  other  places  in 
the  state  at  such  time  as  a  majority  of  the  board  may  deter- 
mine. 

657.  The  board  must  keep  a  record  of  all  its  proceedings 
and  any  member  may  cause  his  dissent  to  the  action  of  the 
majority  upon  any  matter  to  be  entered  upon  such  record. 

658.  The  board  or  a  majority  thereof,  may  elect  one  of 
its  members  vice-chairman,  and  such  officer  shall  have  and 
exercise  all  the  authority  of  the  chairman  in  the  absence  of 
the  latter.    The  board  may  also  establish  rules  and  regulations 
not  inconsistent  with  law  for  its  government.    All  such  rules 
and  regulations  must  be  recorded  in  the  minutes  of  the  board. 

659.  The  chairman  may  issue  subpoenas  and  compel  the 
attendance  of  witnesses  before  the  board  or  any  member  there- 
of, in  the  same  manner  that  any  court  in  this  state  may;  and 
whenever  the  testimony  of   any  witness  upon   any  matter 
pending  before  it  is  material,  the  chairman  must  cause  the 
attendance  of  the  witness  before  such  board,  or  a  member 
thereof,  to  testify  concerning  such  matter,  and  the  board  may 
make  a  reasonable  allowance  therefor  not  exceeding  the  fees 
of  witnesses  in  civil  cases,  which  must  be  paid  out  of  the  ap- 
propriation for  the  contingent  expenses  of  the  board,  but  in 

86 


BUDGETARY  LEGISLATION 

no  instance  can  an  allowance  be  made  in  favor  of  a  witness 
who  appears  in  behalf  of  a  claimant. 

Each  member  of  the  board  may  take  depositions  to  be  used 
before  it. 

660.  It  shall  be  the  duty  of  one  or  more  members  of  the 
board  as  may  be  designated  by  the  board,  or  as  requested  by 
the  governor,  to  examine  and  expert,  or  cause  to  be  examined 
and  experted,  the  books  of  the  different  state  prisons,  reform- 
atories, state  hospitals  and  other  institutions,   commissions, 
bureaus  and  officers  of  the  state,  at  least  once  in  each  year, 
and  as  often  as  may  be  deemed  necessary.     The  officers  of 
said  prisons,  reformatories,  hospitals  and  other  institutions, 
boards,  commissions  and  bureaus  and  the  several  officers  of  the 
state,  must  permit  such  examination  and  experting  and  must 
upon  demand  produce  without  unnecessary  delay  all  books, 
contracts  and  papers  in  their  respective  offices,  and  must  fur- 
nish upon  demand  the  information  touching  books,  papers  and 
contracts  and   other  matters   pertaining  to   their   respective 
offices. 

661.  It  shall  be  the  duty  of  one  or  more  members  of  the 
board  as  may  be  designated  by  such  board  or  as  may  be  re- 
quested by  the  governor  to  visit  from  time  to  time  every  pub- 
lic institution  maintained  in  whole,  or  in  part,  by  state  appro- 
priations to  ascertain  the  conditions  of  the  same,  and  their 
wants  and  requirements,  and  also  to  visit  public  buildings  in 
course  of  construction  to  ascertain  if  all  the  provisions  of  law 
in  relation  to  such  construction  and  of  the  contracts  therefor 
are  being  faithfully  executed. 

662.  The   board   upon   completion   of   such   examination 
must  make  a  report  in  duplicate  thereon  and  file  one  with  the 
governor,  and  one  in  the  office  of  such  board. 

663.  Every  claim  against  the  state  for  which  an  appropri- 
ation has  been  made  or  for  which  a  state  fund  is  available, 
must  be  presented  to  the  board  for  its  scrutiny  before  being 
paid.    The  board  may  for  cause  postpone  action  upon  a  claim 
for  not  exceeding  one  month. 

664.  Any  person  having  a  claim  against  the  state  for  which 
an  appropriation  has  been  made,  may  present  the  same  to  the 
board  in  the  form  of  an  account  or  petition  and  the  secretary 
of  the  board  must  date,  number,  and  file  such  claim.     The 
board  must  allow  or  reject  the  same  within  thirty  days. 

The  concurrence  of  two  members  of  the  board  shall  be  re- 

87 


BUDGETARY  REFORM  IN  THE  STATES 

quired  to  approve  and  allow  any  claim  against  the  state  in 
whole  or  in  part. 

665.  If  the  board  approve  such  claim  the  members  approv- 
ing the  same  must  over  their  signatures  endorse  thereon  the 

following :     "Approved  for  the  sum  of dollars," 

and  the  secretary  shall  immediately  transmit  the  same  to  the 
office  of  the  state  controller  for  his  action  thereon  and  if  such 
action  is  favorable,  he  shall  draw  his  warrant  for  the  amount 
so  approved  in  favor  of  the  claimant  or  his  assigns ;  provided 
that  the  controller  if  he  objects  thereto  for  any  reason  may 
return  the  same  to  the  secretary  of  said  board  and  said  claim 
shall  not  again  be  presented  to  the  controller  except  with  the 
unanimous  approval  of  the  board. 

666.  If  the  board,  or  a  majority  thereof,  disapprove  any 
claim,  the  same  shall  be  filed  with  the  records  of  the  board 
with  a  statement  showing  such  disapproval  and  the  reasons 
therefor. 

667.  If  no  appropriation  has  been  made,  or  if  no  fund  is 
available  for  the  payment  of  any  claim  against  the  state,  the 
settlement  of  which  is  provided  by  law,  or  if  an  appropriation 
or  fund  has  been  exhausted,  such  claim  must  be  presented  to 
the  board  who  shall  audit  the  same  and  if  approved  by  at  least 
a  majority  vote  thereof  it  shall,  with  the  sanction  of  the  gov- 
ernor, be  transmitted  to  the  legislature  with  a  brief  statement 
of  the  reasons  for  such  approval. 

668.  The  board  shall  cause  to  be  printed  for  distribution 
among  all  state  officers  and  for  the  use  of  any  one  desiring  to 
present  a  claim  against  the  state,  a  set  of  rules  governing  the 
presentation  and  audit  of  demands  against  the  state  funds  and 
appropriations. 

669.  Any  person  having  a  claim  against  the  state,  the  set- 
tlement of  which  is  not  otherwise  provided  for  by  law,  must 
present  the  same  to  the  board  at  least  four  months  before  the 
meeting  of  the  legislature,  accompanied  by  a  statement  show- 
ing the  facts  constituting  the  claim,  verified  in  the  same  man- 
ner as  complaints  in  civil  actions.    Before  finally  passing  upon 
any  such  claim,  notice  of  the  time  and  place  of  hearing  must 
be  mailed  to  the  claimant  at  least  fifteen  days  prior  to  the  date 
set  for  final  action.     At  the  time  designated  the  board  must 
proceed  to  examine  and  adjust  such  claims.     It  may  hear  evi- 
dence in  support  of  or  against  them  and,  with  the  sanction  of 
the  governor,  report  to  the  legislature  such  facts  and  recom- 

88 


BUDGETARY  LEGISLATION 

mendations  concerning  them  as  may  be  proper.  In  making 
such  recommendations  the  board  may  state  and  use  any  offi- 
cial or  personal  knowledge  which  any  member  thereof  may 
have  touching  such  claims. 

670.  The  board  must  make  up  its  report  and  recommen- 
dations concerning  such  matters  as  the  law  requires  of  it  at 
least  thirty  days  before  the  meeting  of  the  legislature.     The 
board  must  give  to  the  state  controller  for  his  use  at  such  time 
as  he  shall  demand  a  statement  showing  all  its  recommenda- 
tions for  appropriations  by  the  legislature. 

671.  The  board  must  not  entertain,  for  the  second  time,  a 
demand  against  the  state  once  rejected  by  it  or  by  the  legis- 
lature unless  such  facts  are  presented  to  the  board  as  in  suits 
between  individuals  would  furnish  sufficient  ground  for  grant- 
ing a  new  trial.     Any  person  interested,  who  is  aggrieved  by 
the  disapproval  of  a  claim  by  the  board,  may  appeal  from  the 
decision  to  the  legislature  of  the  state,  by  filing  with  the  board 
a  notice  thereof,  and  upon  the  receipt' of  such  notice  the  board 
must  transmit  the  demand  and  all  the  papers  accompanying  the 
same,  with  a  statement  of  the  evidence  taken  before  it,  to  the 
legislature. 

672.  The  controller  must  not  draw  his  warrant  for  any 
claim  unless  it  has  been  approved  by  the  state  board  of  con- 
trol, and  when  hereafter,  the  controller  is  directed  to  draw  his 
warrant  for  any  purpose,  this  direction  must  be  construed  as 
subject  to  the  provisions  of  this  section,  unless  the  direction 
is  accompanied  by  a  special  provision  exempting  it  from  the 
operation  of  this  section. 

673.  Whenever  the  board  has  reason  to  believe  that  the 
controller  has  drawn  or  is  about  to  draw  his  warrant  without 
authority  of  law,  or  for  a  larger  amount  than  the  state  ac- 
tually owes,  the  board  must  notify  the  treasurer  of  state  not 
to  pay  the  warrant  so  drawn  or  to  be  drawn ;  and  thereupon  the 
treasurer  is  prohibited  from  paying  the  warrant,  whether  al- 
ready drawn  or  not,  until  he  is  otherwise  directed  by  the  legis- 
lature, v  |r  ^ 

674.  Claims  upon  the  contingent  fund  of  either  house  of 
the  legislature  and  for  official  salaries,  are  exempted  from  the 
operation  of  the  provisions  of  this  article. 

675.  The  money  in  the  state  treasury  must  be  counted  by 
the  state  board  of  control  at  least  once  every  month,  without 
giving  the  treasurer  any  previous  notice  of  the  day  or  hour 

89 


BUDGETARY  REFORM  IN  THE  STATES 

of  counting;  the  board  may  at  any  counting  place  any  sum 
in  bags  or  boxes  and  mark  and  seal  the  same  with  a  seal 
to  be  adopted  and  kept  by  it,  and  may,  at  any  subsequent 
counting  count  each  bag  or  box  separately  and  credit  at  the 
value  stamped  thereon  the  contents  of  such  bags  or  boxes 
as  part  of  the  money  counted  without  making  a  detailed  count 
of  such  contents.  They  shall  count  as  cash  all  evidence  of 
money  belonging  to  the  state  upon  deposit  outside  the  state 
treasury  that  may  be  held  by  the  treasurer  in  accordance  with 
law  and  shall  determine  for  themselves  whether  such  evidence 
is  sufficient  according  to  law. 

After  each  count  of  money  they  must  make  and  file  with 
the  secretary  of  state  and  cause  to  be  published  in  some  news- 
paper in  the  city  of  Sacramento,  an  affidavit  showing : 

1.  The  amount  of  money  or  credit  that  ought  to  be  in  the 
state  treasury. 

2.  The  amount  and  kind  of  money  or  credit  actually  there- 
in. 

676.  Whenever  and  as  often  as  there  is  in  the  state  treas- 
ury the  sum  of  ten  thousand  dollars  as  the  proceeds  of  the 
sale  of  state  school  lands  the  board  must  invest  the  same  in 
the  bonds  of  this  state,  or  in  the  bonds  of  the  United  States, 
or  in  the  bonds  of  any  county,  permanent  road  district,  city 
and  county,  city,  town,  or  school  district  of  this  state;  the 
investments  to  be  made  in  such  manner  and  on  such  terms 
as  the  board  shall  deem  best  for  the  fund.     All  such  bonds 
purchased  by  the  board  under  the  provisions  of  this  section 
must  be  delivered  to  the  state  treasurer  who  shall  keep  them 
as  a  special  school  fund  deposit,  and  the  interest  upon  such 
bonds  when  collected  shall  be  placed  by  him  to  the  credit  of 
the  state  school  fund. 

677.  Whenever  and  as  often  as  there  is  in  the  state  treas- 
ury to  the  credit  of  the  estates  of  deceased  persons'  fund  (in 
excess  of  the  retention  hereinafter  provided  for)  the  sum  of 
ten  thousand  dollars  or  more,  the  board  must  invest  the  same 
in  the  bonds  of  this  state,  or  in  the  bonds  of  the  United  States, 
or  in  the  bonds   of  the  several  counties,   city  and  county, 
permanent  road  districts,  cities  and  towns,  or  school  districts 
of  this  state;  the  investments  to  be  made  in  such  manner  and 
on  such  terms  as  the  board  shall  deem  best  for  the  fund.    No 
investment  shall  be  made  which  with  the  amounts  previously 
invested  shall  reduce  the  uninvested  portion  of  the  fund  below 

90 


BUDGETARY  LEGISLATION 

the  amount  of  ten  thousand  dollars,  and  whenever  a  demand 
presented  against  said  fund  will  reduce  the  amount  of  cash 
therein  below  the  specific  amount  of  ten  thousand  dollars,  it 
shall  be  the  duty  of  the  board  to  sell  such  bonds  belonging 
to  said  fund  as  they  may  deem  proper,  for  the  purpose  of 
making  good  the  cash  retention  of  ten  thousand  dollars. 

Bonds  purchased  by  the  board  under  the  provisions  of  this 
section  must  be  delivered  to  the  state  treasurer,  who  shall  keep 
them  as  a  portion  of  said  estates  of  deceased  persons'  fund, 
and  the  interest  upon  such  bonds  shall  be  paid  into  the  state 
school  fund  and  apportioned  like  other  moneys  employed  for 
the  support  of  common  schools. 

678.  Whenever  under  the  provisions  of  law  the  board  of 
supervisors,   trustees,   common   council,   or  other  governing 
boards  or  bodies  of  any  county,  city  or  county,  city  or  town, 
or  school  district  of  this  state  shall  advertise  the  sale  of  bonds 
voted  for  any  purpose,  the  clerk  of  such  board,  trustees,  com- 
mon council,  or  other  governing  board  or  body  shall  forthwith, 
by  mail,  postage  prepaid,  notify  the  state  board  of  control  and 
state  treasurer,  at  the  capitol,  of  such  issuance  and  sale  of 
bonds,  and  shall  specify  the  purposes  for  which  such  bonds 
were  voted,  the  amount  of  the  total  issue  for  each  purpose, 
the  denomination  of  each  bond  showing  date  of  issuance  and 
date  of  maturity,  the  rate  of  interest  showing  when  and  where 
payable,  the  assessed  value  of  the  property  upon  which  such 
bonds  are  a  lien  and  the  total  amount  of  other  bonded  indebt- 
edness which  is  a  lien  upon  said  property. 

679.  At  any  sale  of  bonds  by  the  state  treasurer  the  board 
may  become  bidders  and  purchase  bonds  with  the  funds  at 
their  disposal,  and  the  appropriate  transfer  of  funds  must  be 
made  by  the  controller  and  treasurer  on  the  books  of  their 
offices.   No  purchase  of  bonds  shall  be  completed  by  the  board 
until  the  attorney  general  shall  have  approved  the  validity  of 
the  issue. 

680.  The  board,  with  the  consent  of  the  governor,  shall 
have  power  to  authorize  the  creation  of  deficiencies  in  any  ap- 
propriations of  money  made  by  law  in  cases  of  actual  necessity 
and  shall  authorize  the  payment  of  deficiencies  out  of  any 
money  which  may  be  appropriated  for  such  purpose.     No  de- 
ficiency shall  be  authorized  except  upon  the  written  authority, 
first  obtained,  of  a  majority  of  the  members  of  the  board  and 
of  the  governor.    Any  indebtedness  attempted  to  be  created 

91 


BUDGETARY  REFORM  IN  THE  STATES 

against  the  state  in  violation  of  these  provisions  shall  be  null 
and  void,  and  shall  not  be  allowed  by  the  board  of  control 
or  the  controller. 

68 1.  The  board  shall  have  power  to  authorize  the  sale  or 
exchange  of  any  property,  except  real  estate,  which  belongs  to 
the  state  and  which,  in  their  judgment,  it  shall  be  for  the 
best  interests  of  the  state  to  sell  or  exchange. 

682.  The  board  shall  have  general  powers  of  supervision 
over  all  matters  concerning  the  financial  and  business  policies 
of  the  state,  and  shall,  whenever  they  deem  it  necessary  or  at 
the  instance  of  the  governor,  institute  or  cause  the  institution 
of  such  investigations  and  proceedings  as  they  may  deem 
proper  to  conserve  the  rights  and  interests  of  the  state. 

683.  All  contracts  entered  into  by  any  state  officer,  board, 
commission,  department,  or  bureau,  for  the  purchase  of  sup- 
plies and  materials,  or  either,  shall  before  the  same  becomes 
effective  be  transmitted  with  all  papers,  estimates  and  recom- 
mendations concerning  the  same,  to  the  state  board  of  control 
for  consideration.    If  a  majority  of  such  board  approve  the 
same,  it  shall,  from  the  date  of  such  approval,  be  in  force  and 
effect.     No  state  officer,  board,  commission,  department,  or 
bureau,  shall  purchase  supplies  and  materials,  or  either,  in 
open  market,  unless  permission  has  been  given,  upon  a  presen- 
tation of  the  necessity  therefor,  by  the  state  board  of  control; 
provided,  that  to  meet  an  emergency,  supplies  and  materials 
of  a  perishable  nature,  in  an  amount  not  exceeding  one  hun- 
dred dollars  in  value,  may  be  purchased  by  such  state  officer, 
board,  commission,  department,  or  bureau  without  the  per- 
mission of  the  said  board  of  control. 

684.  Whenever  by  the  provisions   of   this  code   or  any 
statute  or  law  now  in  force  or  that  may  hereafter  be  enacted 
a  duty  is  imposed  or  authority  conferred  upon  the  "state  board 
of  examiners"  or  the  "board  of  examiners"  and  the  members 
thereof  such  duty  and  authority  are  hereby  imposed  and  con- 
ferred upon  the  state  board  of  control  and  the  members  there- 
of, the  same  as  though  the  title  of  the  state  board  of  control 
had  been  specifically  set  forth  and  named  therein.     For  the 
purposes  of  this  chapter  the  terms  "state  board  of  examiners" 
and  "board  of  examiners,"  respectively,  shall  be  construed  to 
mean  and  refer  to  the  "state  board  of  control,"  and  wherever 
in  this  code  or  in  any  statute  or  law  the  term  "member  of 
the  state  board  of  examiners"  or  "member  of  the  board  of 

92 


BUDGETARY  LEGISLATION 

examiners"  is  used  it  shall  be  construed  to  mean  and  refer  to  a 
"member  of  the  state  board  of  control." 

685.  Every  state  office,  board,  commission  or  department 
to  whom  is  given  by  law  the  authority  to  make  purchases  of 
material  or  supplies,  must,  upon  the  request  of  the  board  of 
control,  designate  some  certain  officer  or  employee  in  such 
office,  board,  commission  or  department  whose  duty  it  shall  be 
to  make  such  reports  at  such  times  and  in  such  manner  to  the 
board  of  control  as  said  board  shall  from  time  to  time  re- 
quire. 

686.  There  is  hereby  established  in  connection  with  and 
under  the  supervision  of  the  state  board  of  control  a  depart- 
ment of  public  accounting.     The  board  shall  appoint  a  su- 
perintendent of  accounts  at  an  annual  salary  of  three  thousand 
dollars,  and  two  assistants  at  an  annual  salary  of  twenty-seven 
hundred  dollars  each.     Such  appointees  shall  be  skillful  ac- 
countants and  well  versed  in  public  accounting.     They  shall 
(each)  execute  a  bond  to  the  state  in  the  sum  of  ten  thou- 
sand dollars.     They  shall  be  civil  executive  officers  and  their 
salaries  shall  be  paid  in  the  same  manner  and  at  the  same 
time  as  the  salaries  of  state  officers  are  paid.    The  board  may 
also  appoint  such  additional  accountants  as  may  be  necessary 
to  carry  on  the  work  of  the  department  at  salaries  not  to 
exceed  for  any  one  of  such  appointees  the  sum  of  twenty-four 
hundred  dollars  per  annum.    Such  salaries,  upon  authority  of 
the  board,  shall  be  paid  out  of  money  appropriated  for  the  use 
of  the  department  at  the  same  time  and  in  the  same  manner 
as  the  salaries  of  state  officers  are  paid.     Such  accountants 
shall  be  chosen  from  persons  who  have  successfully  taken  an 
open  competitive  examination  given  along  practical  lines  show- 
ing their  fitness  for  the  work  required.    They  shall  each  ex- 
ecute to  the  state  a  bond  in  the  sum  of  five  thousand  dollars. 
All  of  the  appointees  in  this  section  are  empowered  to  ad- 
minister oaths  in  the  furtherance  of  their  official  duties. 

687.  The  board  of  control,  through  the  department  of 
public  accounting  shall  devise,  install  and  supervise  a  uniform 
system  of  accounting  and  reporting  for  any  and  all  officers 
or  persons  in  this  state  permitted  or  charged  by  law  with  the 
keeping  of  public  accounts  and  records,  and  the  custody,  con- 
trol and  handling  of  public  money  or  its  equivalent,  to  the 
end  that  there  shall  be  obtained  similar  and  comparable  data 
for  every  public  office  and  every  public  account  of  the  same 

93 


BUDGETARY  REFORM  IN  THE  STATES 

class,  and  that  there  shall  be  a  general,  systematic  and  uni- 
form check  upon  the  receipt  and  disbursement  of  all  public 
revenue. 

688.  With  the  sanction  of  the  state  board  of  control,  the 
department  of  public  accounting  may  require  from  all  such 
officers  or  persons  mentioned  in  the  foregoing  section  finan- 
cial and  statistical  reports,  duly  verified,  covering  the  period 
of  each  fiscal  year,  which  report  shall  be  made  out  upon  blank 
forms  prescribed  and  adopted  and  furnished  by  the  department 
of  public  accounting,  and  mailed  to  such  officers  or  persons  not 
less  than  sixty  days  before  the  time  such  reports  are  required 
to  be  filed  with  such  department.     When  necessary,  the  de- 
partment may  require  special  reports  from  any  such  officers 
or  persons,  which  must  be  filed  with  the  department  without 
delay. 

689.  The  department  of  public  accounting  is  given  full 
power  to  examine,  through  any  of  its  officers  or  appointees, 
all  accounts  and  all  financial  affairs  of  every  officer  or  person 
mentioned  in  section  687  of  this  code,  and  shall  have  the  right 
to  enter  into  any  public  office  or  institution  in  this  state  and 
examine  any  books,  papers  or  documents  contained  therein' 
or  belonging  thereto  for  the  purpose  of  making  such  examina- 
tion, and  shall  have  access,  in  the  presence  of  the  custodian 
thereof,  or  his  deputy,  to  the  cash  drawers  and  cash  in  the 
custody  of  such  officer  or  person  and  shall  also  have  the  right, 
during  business  hours,  to  examine  the  public  accounts  in  any 
depository  which  has  public  funds  in  its  custody. 

690.  Any  officer  or  person  who  shall  fail  or  neglect  to 
make,  verify  and  file  with  the  department  of  public  account- 
ing any  such  report  as  is  required  by  this  article,  or  who  shall 
fail  or  neglect  to  follow  the  directions  of  the  department  of 
public  accounting  in  keeping  the  accounts  of  his  office,  or 
who  shall  refuse  to  permit  the  examination  or  access  to  the 
books,  accounts,  papers,  documents  or  cash  drawer  or  cash 
of  his  office  to  a  representative  of  said  department,  or  who 
shall  in  any  way  interfere  with  such  examination,  shall  be 
guilty  of  a  misdemeanor  and  upon  conviction  shall  be  fined 
not  less  than  one  hundred  dollars  nor  more  than  one  thou- 
sand dollars  or  shall  be  imprisoned  in  the  county  jail  not  less 
than  thirty  days,  or  both. 

691.  The  board  must  biennially  report  to  the  legislature  a 
history  of  its  transactions  and  investigations. 

94 


BUDGETARY  LEGISLATION 

Tennessee.  On  April  6,  1917,  Tennessee  passed  an  act-* 
providing  for  the  adoption  of  a  budget  system  and  setting 
forth  in  unusual  detail  the  procedure  to  be  followed.  The 
preparation  of  the  budget  is  vested,  in  the  first  instance,  in 
the  hands  of  a  State  Budget  Commission,  created  by  the 
act,  composed  of  the  Governor  as  chairman,  and  the  comp- 
troller, treasurer,  secretary  of  state  and  auditor.  All  depart- 
ments and  institutions  receiving  aid  from  the  state  are  re- 
quired to  submit  their  estimates  to  this  body  and  the  comp- 
troller must  furnish  it  with  financial  statements  regarding 
revenues  and  expenditures,  balances,  etc. 

On  the  basis  of  these  estimates  and  statements  and  on 
the  results  of  a  complete  study  of  the  state  services  and  insti- 
tutions which  it  is  directed  to  make,  the  commission  is  directed 
to  prepare  and  print  a  tentative  budget.  Public  hearings  on 
this  budget  must  then  be  held  at  which  the  heads  of  all  services 
and  institutions  have  a  right  to  be  present  and  heard  in  respect 
to  their  estimates.  It  is  further  provided  that  the  Governor- 
elect  and  the  members  of  the  legislature  shall  be  invited  to  sit 
with  the  commission  at  such  hearings.  Following  these  hear- 
ings the  commission  is  directed  to  prepare  and  submit  to  the 
legislature  upon  its  convening  a  revised  budget  representing  its 
final  opinion  regarding  the  provisions  that  should  be  made  for 
the  financing  of  the  state  during  the  ensuing  biennium. 

Though  the  act  thus  vests  the  preparation  of  the  budget  in 
a  commission,  instead  of  in  the  hands  of  the  Governor,  it  is 
evidently  the  idea  of  the  legislature  that  the  latter  shall  have 
a  leading  part  in  this  act,  since,  in  addition  to  making  him 
the  chairman  of  the  commission,  the  act  provides  that  "at 
the  time  of  transmitting  to  the  legislature  his  estimates  as 
above  required,  the  Governor  shall  make  such  recommenda- 
tions relative  to  the  appropriations  for  which  estimates  are 
submitted  as  to  him  shall  seem  proper." 

A  feature  of  special  interest  in  this  act  is  that  it  makes  pro- 
vision for  the  important  power  of  effecting  transfers  between 

95 


BUDGETARY  REFORM  IN  THE  STATES 

appropriation  heads  and  of  meeting  expenditures  required  by 
emergency  conditions  though  express  appropriations  therefor 
may  not  have  been  made.  Such  transfers  and  emergency  ex- 
penditures can  only  be  made  upon  the  approval  of  the  Budget 
Commission  being  first  obtained. 

Another  feature  of  importance  is  the  provision  that  the 
budget  shall  be  considered  by  the  appropriations  committees 
of  the  two  houses  sitting  jointly,  and  that  such  meetings  shall 
be  public  at  which  all  interested  parties,  including  the  repre- 
sentatives of  the  press,  citizen  organizations  and  taxpayers 
shall  have  a  right  to  be  present  and  be  heard.  It  will  thus  be 
seen  that  unusual  precautions  have  been  taken  to  secure  pub- 
licity, both  when  the  tentative  budget  is  under  consideration 
and  the  final  budget  is  being  passed  upon  by  the  committees 
of  the  legislature. 

The  commission  is  given  power  to  employ  adequate  assist- 
ance for  the  performance  of  its  work  and  to  require  from  the 
services  and  institutions  information  needed  by  it.  The  clause 
which  provides  that  "all  bills  introduced  in  either  House  carry- 
ing appropriations  should  be  itemized  according  to  the  classi- 
fications and  in  such  form  as  the  Budget  Commission  shall 
prescribe"  will  make  it  possible  for  that  body  to  ensure  that  the 
money  voted  shall  be  voted  in  such  a  way  as  to  furnish  the 
basis  for  an  accounting  system  that  will  produce  the  data  re- 
garding expenditures  in  the  forms  required  for  budgetary  pur- 
poses. 

Following  is  a  copy  of  this  act : 

An  Act  to  establish  a  general  budgetary  system  for  the  State 
of  Tennessee,  to  create  a  budget  commission,  prescribe  its 
duties ;  and  to  provide  ways  and  means  for  the  enforcement 
of  this  Act.  Approved  April  6,  1917.  (Acts  of  1917, 
Chapter  139.) 

Section  i.  There  shall  be  and  there  is  hereby  constituted 
and  established  a  State  Budget  Commission,  which  shall  be 
composed  of  five  members,  as  follows:  The  Governor,  the 
Comptroller,  the  Treasurer,  the  Secretary  of  State,  and  the 


BUDGETARY  LEGISLATION 

Auditor,  of  which  Commission  the  Governor  shall  be  chair- 
man. 

Sec.  2.  On  or  before  the  first  day  of  December,  biennially 
in  the  even  numbered  years,  there  shall  be  filed  with  the  Budget 
Commission  by  each  State  officer  or  head  of  department  and 
by  each  State  Board,  Commission  or  Board  of  Trustees  in 
charge  of  any  institution  supported  wholly  or  in  part  by  ap- 
propriations from  the  State  Treasury,  except  educational 
boards  and  institutions,  an  estimate  in  itemized  form,  in 
detail,  of  the  amounts  required  by  such  State  office,  depart- 
ment, board,  commission  or  institution,  for  the  proper  support 
and  maintenance,  extension  or  improvement  of  the  work  of 
said  office,  department,  board,  commission  or  institution  for 
the  biennial  period  beginning  with  the  first  day  of  July  there- 
after; together  with  an  estimate  of  the  probable  revenues  of 
said  office  from  all  sources,  including  assessments  and  license 
or  other  fees  for  said  biennium ;  also  a  statement  showing  the 
revenues  and  expenditures  for  the  last  preceding  biennial  peri- 
od, all  of  which  shall  be  arranged  in  proper  manner,  in  de- 
tail by  classifications  and  by  summaries  and  made  in  such 
form  as  the  Budget  Commission  shall  prescribe. 

Sec.  3.  On  or  before  the  first  day  of  December,  biennially 
in  the  even  numbered  years,  the  Comptroller  shall  furnish  to 
the  Governor  the  following  statements : 

1.  A  statement  showing  the  balance  standing  to  the  credit 
of  the  several  appropriations   for  each  department,   institu- 
tion, commission  and  officer  of  the  State,  except  educational 
boards  and  institutions,  and  for  each  and  every  current  pur- 
pose of  the  State  government  at  the  end  of  the  last  fiscal  year. 

2.  A  statement  showing  monthly  revenues  and  expendi- 
tures from  each  appropriation  account  in  the  twelve  months, 
and  the  monthly  revenues  and  expenditures  from  all  the  ap- 
propriation accounts  in  the  twelve  months  of  the  last  fiscal 
year. 

3.  A  statement  showing  the  annual  revenues  and  expen- 
ditures of  each  appropriation  account  for  each  year  of  the 
last  two  fiscal  years  in  which  any  appropriation  account  has 
existed. 

4.  A  statement  showing  the  monthly  average  of  such  ex- 
penditures from  each  of  the  several  appropriation  accounts  for 
the  last  fiscal  year,  and  also  the  total  monthly  average  from 
all  of  them  for  the  last  two  fiscal  years. 

97 


BUDGETARY  REFORM  IN  THE  STATES 

Sec.  4.  On  or  before  the  first  day  of  October,  biennially 
in  the  even  numbered  years,  the  Budget  Commission  must  have 
completed  a  field  survey  of  all  boards,  commissions,  depart- 
ments and  offices  of  the  State,  except  educational  boards  and 
institutions  through  which  shall  be  gained  the  working  knowl- 
edge of  the  State's  activities,  upon  which  the  Budget  Commis- 
sion shall  base  their  analysis  of  the  tentative  budget  and  their 
recommendations  transmitted  to  the  legislature  by  their  chair- 
man, the  Governor.  During  the  interregnum  between  October 
first  and  the  convening  of  the  legislature  on  January  first  the 
tentative  budget  shall  be  compiled  by  the  Budget  Commission, 
summaries  prepared  showing  comparisons  with  revenues  from 
all  sources  and  expenditures  by  the  department  board,  com- 
mission or  office,  except  educational  boards  and  institutions 
for  each  of  the  two  preceding  years,  reasons  for  decreases  and 
increases  given,  definitions  of  functions,  departments,  boards 
and  commissions  furnished,  and  general  efficiency  notes  and 
constructive  criticisms  prepared. 

The  budget  shall  be  printed  and  at  least  one  copy  fur- 
nished to  each  member  of  the  legislature  on  or  before  the 
fifteenth  of  January. 

Sec.  5.  The  State  officers,  departments,  commissions, 
boards  and  institutions,  except  educational  boards  and  institu- 
tions, upon  request  shall  forthwith  furnish  to  the  Budget  Com- 
mission any  information  desired  in  relation  to  the  afifairs  of 
their  respective  offices,  departments,  institutions,  commissions 
and  boards.  The  Budget  Commission,  after  public  hearing 
thereon,  at  which  it  may  require  the  attendance  of  heads  of  de- 
partments and  their  subordinates,  and  at  which  hearings  State 
officers,  heads  of  departments,  members  of  commissions,  or 
boards  of  trustees  in  charge  of  any  institution  shall  have  the 
right  to  be  heard  upon  their  estimates  shall  revise  such  budget 
estimates  according  to  its  judgment.  The  Governor-elect  and 
the  members  of  the  legislature  shall  be  invited  to  sit  with  the 
Budget  Commission  at  such  hearings.  All  reports  of  the  Bud- 
get Commission  shall  be  furnished  to  the  Governor-elect. 

Sec.  6.  Upon  the  convening  of  each  regular  session  of 
the  legislature,  the  Governor,  as  Chairman  of  the  Budget 
Commission  shall  transmit  to  the  legislature  the  budget  of  cur- 
rent expenses  of  the  State  for  the  biennial  period  beginning 
on  the  first  day  of  July  next  thereafter,  which  budget  shall 
include  in  addition  to  the  estimates  for  the  various  State  of- 


BUDGETARY  LEGISLATION 

fices,  departments,  commissions,  boards  and  institutions,  ex- 
cept educational  boards  and  institutions,  an  estimate  for  an 
appropriation  for  emergency  purposes  for  the  ensuing  biennial 
period,  together  with  the  estimates  submitted  to  the  Budget 
Commission  by  such  State  officers,  departments,  commissions, 
boards  and  institutions,  and  also  the  information  furnished 
the  Budget  Commission  by  the  Comptroller  in  accord- 
ance with  Section  3  of  this  Act  in  form  suitable  for  com- 
parison. 

The  money  appropriated  for  emergency  purposes  shall  be 
expended  only  by  the  Budget  Commission  for  the  payment 
of  emergency  claims  against  the  State  for  which  no  specific 
appropriations  shall  have  been  made,  and  in  every  such  case 
the  Budget  Commission  shall  certify  in  writing  to  the  Treas- 
urer and  Comptroller  that  such  a  claim  is  an  emergency  claim 
and  state  their  reasons  in  writing  for  the  expenditure  from 
said  emergency  fund. 

At  the  time  of  transmitting  to  the  legislature  his  estimates 
as  above  required,  the  Governor  shall  make  such  recommen- 
dations relative  to  the  appropriations  for  which  estimates  are 
submitted  as  to  him  shall  seem  proper.  The  Budget  Commis- 
sion may  before  final  action  by  the  legislature  thereon  amend 
or  supplement  the  budget. 

Sec.  7.  All  appropriations  made  by  the  legislature  shall 
be  paid  out  of  funds  appropriated  for  that  purpose  in  the 
State  Treasury  at  such  times  and  in  such  amounts  as  pro- 
vided by  law ;  but  no  money  shall  be  drawn  from  any  fund  in 
the  State  Treasury  in  excess  of  the  total  appropriation  for 
such  State  office,  department,  commission,  board  or  institu- 
tion, nor  in  advance  of  the  time  when  it  is  needed  by  said  State 
officer,  department,  commission,  board  or  institution  for  use 
for  the  purpose  for  which  the  appropriation  was  made.  The 
creation  of  deficiences  by  department  heads  and  disbursing 
officers  is  hereby  prohibited,  and  the  penalty  for  the  violation 
of  this  section  of  the  Budget  Act  shall  be  a  fine  of  not  less  than 
One  Hundred  Dollars. 

Sec.  8.  No  transfer  of  funds  appropriated  for  any  item 
in  the  appropriation  for  any  State  office,  department,  commis- 
sion, board  or  institution,  shall  be  made  except  upon  the  writ- 
ten request  of  the  chief  officer  or  officers  of  such  State  office, 
department,  commission,  board  or  institution,  to  the  Budget 
Commission,  which  request  shall  be  granted  in  writing  by  the 

99 


BUDGETARY  REFORM  IN  THE  STATES 

Budget  Commission  if,  in  its  judgment,  such  a  transfer  of 
funds  is  deemed  necessary  or  expedient. 

Sec.  9.  At  any  time  the  Budget  Commission,  or  their  duly 
accredited  representatives  acting  under  their  instructions,  may 
examine  without  notice  the  affairs  of  any  department,  insti- 
tution, public  work,  commission  or  office  of  the  State  for  the 
purpose  of  ascertaining  facts  and  making  findings  and  recom- 
mendations relative  to  increasing  the  efficiency  of  and  cur- 
tailing the  expense  therein.  In  connection  with  such  exam- 
ination, the  Governor  may  compel  the  attendance  and  testi- 
mony of  witnesses,  administer  oaths,  and  examine  such  per- 
sons as  deemed  necessary,  also  compel  the  production  of  books 
and  papers.  The  orders  and  subpoenas  issued  by  the  Budget 
Commission,  in  pursuance  of  the  authority  in  them  vested 
by  the  provisions  of  this  Section  may  be  enforced  upon 
the  application  of  the  Budget  Commission  to  any  Court 
of  record  by  proceedings  in  contempt  therein  as  provided 
by  law. 

Sec.  10.  The  committees  of  the  House  and  Senate  being 
in  charge  of  appropriation  measures  shall  sit  jointly  in  con- 
sidering the  budget,  which  meetings  shall  be  public  and  to 
which  there  shall  be  admitted  and  heard  all  parties  interested 
in  the  estimates  under  consideration,  the  press,  representatives 
of  citizens  organizations,  taxpayers,  et  al.  At  these  public 
hearings  the  Budget  Commission  shall  have  the  right  to  sit 
and  be  heard  on  all  matters  coming  before  this  joint  com- 
mittee. 

Sec.  ii.  All  unexpended  balances  at  the  end  of  each  bien- 
nium  shall  be  reappropriated  to  each  State  officer,  department, 
commission,  board  or  institution  for  the  full  period  of  one 
calendar  month  after  the  last  day  of  June  to  be  used  only 
to  liquidate  liabilities  incurred  and  unpaid  prior  to  the  last 
day  of  June  of  the  biennium  according  to  schedules,  which 
must  be  prepared  by  each  State  officer,  department,  commis- 
sion, board  or  institution,  which  shall  show  the  actual  liabili- 
ties existing.  It  shall  be  the  duty  of  the  Budget  Commission 
through  its  chairman  to  report  to  the  House  the  bill  making 
these  reappropriations.  Upon  the  expiration  of  the  aforesaid 
calendar  month  for  which  such  unexpended  balances  have 
been  used  to  liquidate  liabilities  incurred  and  unpaid  in  strict 
accordance  with  the  schedules  submitted  by  each  state  officer, 
department,  commission,  board  or  institution  prior  to  the  last 

100 


BUDGETARY  LEGISLATION 

day  of  June  of  the  biennium,  shall  revert  to  the  State  Treas- 
ury from  which  they  were  originally  appropriated. 

On  or  before  Monday  of  each  month  every  State  officer,  de- 
partment, commission,  board  or  institution,  except  educational 
boards  and  institutions,  receiving  State  aid  shall  pay  into  the 
Treasury  of  the  State  the  total  of  all  collections  received  for 
the  State  or  for  the  use  of  any  such  State  officer,  department, 
commission,  board  or  institution  receiving  State  aid  during  the 
preceding  month  from  taxes,  assessments,  licenses,  premiums, 
fees,  penalties,  fines,  costs,  sales,  rentals  or  otherwise,  and 
file  with  the  Auditor  of  the  State  a  detailed,  verified  statement 
of  such  receipts. 

Sec.  12.  For  all  State  officers,  departments,  commissions, 
boards  and  institutions  of  the  State,  the  fiscal  year  shall  be 
and  is  hereby  fixed  to  begin  on  the  first  day  of  July  of  each 
year  and  to  end  on  the  last  day  of  June  of  the  succeeding 
year,  and  all  reports  of  the  departments,  offices,  commissions, 
boards  and  institutions  shall  be  made  as  of  those  dates,  that 
the  Budget  Commission  shall  prepare  an  estimate  of  expendi- 
tures of  all  State  offices,  departments,  commissions,  boards 
and  institutions  to  be  incurred  by  them  from  March  19,  1919, 
to  July  I,  1919. 

Sec.  13.  Every  department,  office,  commission,  board  and 
institution  except  educational  boards  and  institutions  of  the 
State  shall  keep  a  book  or  books,  showing  in  detail  every  credit, 
disbursement  and  receipt,  if  any,  and  shall  keep  on  file  a 
duplicate  of  every  voucher  certified  to  the  Comptroller  for  pay- 
ment and  shall  monthly  compare  his  account  with  account  kept 
in  the  office  of  the  Comptroller. 

Sec.  14.  Any  person  having  a  claim  against  the  State, 
which  requires  action  by  the  legislature,  shall  file  with  the 
Budget  Commission  a  statement  of  the  amount  of  the  claim, 
together  with  a  brief  statement  of  the  facts  upon  which  it  is 
based. 

Sec.  15.  All  bills  introduced  in  either  House  carrying  ap- 
propriations should  be  itemized  according  to  the  classifications 
and  in  such  form  as  the  Budget  Commission  shall  pre- 
scribe. 

Sec.  1 6.  The  Budget  Commission  shall  be  allowed  to  em- 
ploy such  experts  and  clerical  assistants  as  may  be  necessary 
and  shall  be  permitted  to  incur  necessary  expenses  for  print- 
ing, stationery  and  other  incidentals.  The  members  of  the 

101 


Y  REFORM  IN  THE  STATES 


Budget  Commission  and  employees  shall  be  allowed  necessary 
traveling  expenses  while  engaged  upon  the  work  of  the  Com- 
mission. Such  sums  of  money  as  may  from  time  to  time  be 
necessary  to  meet  the  requirements  of  this  Act  are  hereby  ap- 
propriated from  any  moneys  in  the  general  fund  of  the  State 
Treasury  not  otherwise  appropriated. 

Sec.  17.  All  laws  and  parts  of  laws  in  conflict  with  the 
provisions  of  this  Act  be  and  the  same  are  hereby  repealed, 
and  that  this  Act  take  effect  from  and  after  its  passage,  the 
public  welfare  requiring  it. 


CHAPTER  VI 

BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL 

STATES:    WISCONSIN,  VERMONT,  NORTH 

DAKOTA,  SOUTH  DAKOTA 

Wisconsin.  Prior  to  the  movement  for  reform,  which  will 
be  described,  the  system  of  financial  administration  in  Wis- 
consin was  not  dissimilar  from  that  found  in  most  other 
states.  Nothing  in  the  nature  of  a  budget  obtained.  It  is  true 
that  the  secretary  of  state  was  required  by  law  to  submit  to 
each  biennial  session  of  the  legislature  estimates  of  appropria- 
tions needed  for  the  ensuing  two  years  and  to  state  the  con- 
dition of  the  treasury.  It  appears,  however,  that  the  docu- 
ment resulting  was  of  little  or  no  value. 

This  report  is,  however,  of  comparatively  little  value.  The 
estimates  are  not  based  upon  requests  from  the  various  de- 
partments, but  are  merely  recitations  of  previous  grants  for 
similar  purposes  and  the  opinion  of  this  official  as  to  the 
future  needs  for  their  respective  services.  Inasmuch  as  the 
report  is  based  upon  the  calendar  year,  while  the  fiscal  year 
begins  July  i,  the  report  is  of  little  service  for  comparative 
purposes.1  •  '  Ji&i 

Conditions  in  respect  to  the  appropriation  of  funds  were 
especially  bad. 

No  uniformity  is  found  with  respect  to  the  form  of  the  ap- 
propriation bills.  Some  appropriation  measures  run  for  the 
biennium;  some,  especially  those  dealing  with  new  construc- 
tion, for  a  specific  period  of  years  and  the  greater  part  of 
them  run,  by  virtue  of  permanent  statute,  until  specifically 

1  The  Budget,  by  S.  Gale  Lowrie :  Wisconsin  State  Board  of  Pub- 
lic Affairs,  1912,  p.  250. 

103 


BUDGETARY  REFORM  IN  THE  STATES 

repealed.  With  respect  to  the  definitions  in  the  amount  of 
appropriations  there  is  a  like  variation.  Some  appropriations 
specify  definitely  the  amount  to  be  used;  others  state  a  max- 
imum, and  some  are  unlimited  in  amount,  the  statutes  au- 
thorizing the  payment  of  a  sum  sufficient  to  carry  out  the 
purposes  of  the  law.  This,  according  to  the  interpretation  of 
the  Attorney-General,  constitutes  a  legal  appropriation.  Be- 
sides this  there  is  a  statute  authorizing  the  Secretary  of  State 
to  issue  warrants  in  payments  of  grants  whenever  the  statutes 
authorize  expenditures  to  be  made.  This  makes  it  impossible 
to  determine  with  any  definiteness  what  appropriations  are  au- 
thorized for  the  various  departments,  inasmuch  as  statutes 
fixing  salaries  or  allowing  traveling  expenses  are  under  the 
law  considered  appropriations.1 

A  large  part  of  the  expenditures  of  the  state  for  this  reason, 
and  because  Wisconsin  probably  more  than  any  other  state, 
provided  for  the  support  of  its  institutions  and  departments 
by  permanent  statutes  which  ran  until  repealed,  thus  did  not 
come  before  the  legislature  for  biennial  review. 

The  state  had,  however,  one  excellent  feature  in  respect  to 
the  system  employed  for  the  consideration  of  appropriation 
bills.  This  was  that  all  bills  carrying  an  appropriation  had  to 
go  to  a  Joint  Committee  on  Finance  of  the  two  houses.  They 
might  go  in  the  first  instance  to  committees  having  jurisdic- 
tion of  their  subject  matter,  but  after  consideration  by  these 
committees  they  went  to  the  Joint  Committee  on  Finance  for 
consideration  in  respect  to  their  financial  aspects.  This  af- 
forded a  very  desirable  concentration  of  authority  not  only  in 
the  houses  individually  but  in  the  legislature  as  a  whole. 

Unfortunately,  however,  for  reasons  already  enumerated, 
this  committee  did  not  get  the  information  needed  in  order 
that  it  might  perform  its  function  properly. 

A  most  serious  criticism  should  be  directed  toward  the 
fact  that  too  little  information  is  available  for  the  legislature 
in  its  consideration  of  the  fiscal  plan  and  that  no  system  is  in 
use  which  will  centralize  the  responsibility  for  making  use  of 

*  Cowrie,  .op.  cit.,  p.  251. 

104 


BUDGETARY  LEGISLATION 

financial  programs  or  of  administering  them.  Bills  are  often 
introduced  entirely  unofficially  and  it  is  impossible  to  deter- 
mine whether  or  not  they  represent  the  real  needs  of  the  state 
services.  The  only  examination  given  them  is  a  hurried  study 
by  the  joint  committee  of  finance  during  the  pressure  of  the 
session.  Any  information  here  developed  is  usually  mastered 
only  by  the  chairman  of  the  committee,  consequently  it  is 
impossible  to  give  these  matters  the  scrutiny  and  care  which 
they  deserve.1 

The  first  step  towards  the  correction  of  this,  and  of  bud-  > 
getary  reform  generally,  was  made  by  the  Committee  on  "N 
Finance  in  1911,  when  it  employed  expert  accountants  to  as- 
sist it  in  its  work  and  called  upon  the  departments  to  submit 
their  estimates  upon  forms  prepared  and  sent  out  by  the  com- 
mittee. In  point  of  fact  little  was  accomplished  by  this  move, 
due  partly  to  the  fact  that  the  information  sought  was  received 
at  too  late  a  date  to  be  of  much  value,  and  partly  to  the  fact 
that  the  work  of  critically  examining  and  revising  estimates 
cannot  be  done  by  a  body  having  no  basis  of  past  experience 
and  no  intimate  relations  with  the  services  from  the  adminis- 
trative standpoint. 

Persuaded  by  this  the  legislature  in  the  same  year,  1911, 
took  the  important  step  of  providing  for  the  creation  of  a 
permanent  body  that  should  have  this  duty  of  compiling  the 
estimates.2  This  body  was  given  the  name  of  State  Board  of  ^ 
Public  Affairs  and  was  made  to  consist  of  the  Governor  as 
chairman,  the  secretary  of  state,  the  chairman  of  the  finance 
committees  of  the  two  houses  and  two  other  members,  who 
it  was  expressly  provided  should  not  be  members  of  the  faculty 
of  the  University  of  Wisconsin.  A  statute  of  1913  3  added  to 
the  board  the  president  pro  tern,  of  the  senate  and  the  speaker 
of  the  assembly,  a  third  member  to  be  appointed  by  the  Gov- 
ernor and  made  certain  other  changes  in  the  provisions  of  the 
original  act. 

1Lowrie,  op.  cit.,  p.  15. 
"Acts  of  1911,  Chapter  583. 
8  Acts  of  1913,  Chapter  728. 

105 


BUDGETARY  REFORM  IN  THE  STATES 

According  to  this  act  as  amended  the  board  had  the  powers 
only  of  taking  steps  looking  to  the  formulation  of  the  esti- 
mates according  to  a  uniform  plan  and  of  compiling  and  sub- 
mitting the  estimates  as  received  by  it.  In  1915  the  act  was 
so  amended,  however,  as  not  only  to  confer  upon  the  board 
the  duty  of  submitting  its  recommendations  in  respect  to  ap- 
propriations needed  but  of  acting  as  a  general  administrative 
board  to  prescribe  methods  looking  to  the  efficient  conduct  of 
public  affairs.  To  enable  it  to  perforrn  its  duties  it  was  given 
large  powers  of  requiring  the  production  of  papers,  the  taking 
of  testimony  under  oath,  the  employment  of  experts,  etc. 

Regarding  the  practical  results  of  this  system,  the  commis- 
sion to  compile  information  for  the  Massachusetts  Constitu- 
tional Convention,  now  in  session,  received  under  date  of 
Sept.  9,  1916,  the  following  interesting  communication  from 
the  secretary  to  Governor  Philipp,  of  Wisconsin.1 

Prior  to  this  time  (1913)  a  single  department  might  have 
one  or  a  dozen  appropriations  for  the  same  purpose,  as,  for 
example,  the  department  would  have  an  appropriation  for  the 
general  running  expenses ;  likewise  appropriations  for  the  sal- 
aries of  the  commissioners  and  another  appropriation  for  the 
salaries  of  clerks.  In  the  case  of  almost  every  department, 
board  and  commission,  in  addition  to  the  appropriations  of 
stated  amounts,  they  were  furnished  stationery,  office  supplies, 
postage,  etc.,  by  the  Superintendent  of  Public  Property.  In 
the  matter  of  printing,  they  were  likewise  required  to  be  fur- 
nished unlimited  amounts  by  the  State  Printing  Board.  In 
consequence  of  this  system,  or  possibly  lack  of  system,  de- 
partments, boards  and  commissions  were  little  concerned  with 
the  cost  of  printing  or  the  cost  of  stationery  and  office  sup- 
plies, as  these  amounts  did  not  appear  charged  against  their 
accounts. 

The  budget  plan  aims  to  put  all  State  boards,  departments 
and  commissions,  wherever  practicable,  upon  a  limited  appro- 
priation basis;  all  expenses  incurred  by  a  department,  board 
or  commission  being  chargeable  to  its  particular  appropria- 

*The  Massachusetts  Constitutional  Convention  1917.  Bulletin  No. 
2,  State  Budget  Systems  in  the  United  States,  pp.  27-28. 

106 


BUDGETARY  LEGISLATION 

tion.  Under  the  budget  plan,  appropriations  are  divided  into 
three  main  classes  according  to  the  nature  of  the  expenditure, 
namely :  ( i )  operation,  to  cover  the  running  expenses  of  the 
board,  department  or  commission;  (2)  capital,  for  the  purpose 
of  new  property;  and  (3)  maintenance,  for  the  upkeep  of 
permanent  property.  By  making  appropriations  under  these 
three  main  headings,  legislative  control  over  appropriations  is 
obtained,  in  that  the  law  does  not  permit  the  expenditure  of 
either  capital  or  maintenance  appropriations  for  operating 
purposes. 

In  speaking  of  the  budget  system  in  general,  it  may  be 
stated  that  it  has  resulted  in  savings  for  the  State  of  Wis- 
consin in  that  the  system  demands  greater  accountability. 
Every  two  years,  the  budget  is  submitted  to  the  Legislature. 
In  this  budget  are  contained  the  actual  disbursements  as  made 
from  previous  appropriations.  The  departments,  knowing  that 
they  will  be  called  to  account  by  the  Legislature,  are,  as  a  rule, 
more  careful  to  see  that  the  letter  and  intent  of  the  law  is 
carried  out.  The  Auditor  of  State  can  likewise  make  a  stricter 
audit  of  the  accounts  in  that  he  has  definite  information  be- 
fore him  as  to  the  real  purpose  of  the  appropriation.  Before 
a  bill  is  passed  for  payment,  it  is  determined  whether  or  not 
this  particular  expenditure  was  included  in  the  department 
budget. 

The  budget  system  has  introduced  a  reform  in  procedure 
which  likewise  results  in  saving  to  the  State.  Formerly,  during 
the  legislative  session,  it  was  the  custom  for  the  heads  of 
departments  to  lobby  for  their  particular  appropriation  meas- 
ures. This  has  been  done  away  with  to  a  very  large  extent. 
The  majority  of  the  departments,  after  their  budgets  have 
been  submitted  to  this  office,  pay  very  little  attention  to  the 
same  until  they  are  called  to  the  Joint  Finance  Committee  of 
the  Legislature. 

At  the  present  time,  I  think  we  can  say  there  is  not  a  single 
department  that  is  opposed  to  the  budget  system.  We  still 
have  problems  before  us  to  be  solved  in  connection  with  the 
system.  It  is  still  a  question  as  to  just  how  rigidly  depart- 
ments should  be  tied  up  in  their  appropriations. 

Following  is  a  copy  of  the  act  in  its  present  amended  form : 

An  Act  relating  to  the  Board  of  Public  Affairs.     Approved 
July  31,  1913  (Acts  of  1913,  Chapter  728).    Amended  by 

107 


BUDGETARY  REFORM  IN  THE  STATES 

acts  approved  August  26,  1915  (Acts  of  1915,  Chapter  606), 
and  acts  approved  January  30,  1917,  and  May  28,  1917 
(Acts  of  1917,  Chapters  2  and  300). 

CHAPTER  15 

Section  15.01.  In  this  chapter,  unless  such  construction 
would  be  inconsistent  with  the  manifest  intent  of  the  legisla- 
ture, the  terms, 

1 i )  "Public  body''  means  and  includes  every  incumbent  of 
any  office  or  position  under  the  constitution  or  laws  of  this 
state;  every  department,  commission  or  board  in  which  any 
such  incumbent  is  employed  as  such;  and  every  officer,  of- 
fice, department,  commission,  board,  institution,  body  or  or- 
ganization, the  conduct  or  operation  of  which  involves  the 
receipt,  expenditure  or  handling  of  any  state  funds  or  prop- 
erty. 

(2)  "Accounts"  means  all  accounts,  books,  records  and 
reports  relating  to  the  jurisdiction  of  any  public  body. 

(3)  "Jurisdiction"  means  and  includes  all  duties,  liabilities, 
authority,  powers  or  privileges  imposed  or  conferred  by  law 
upon  any  public  body. 

Sec.  15.02.  The  governor,  secretary  of  state,  president 
pro  tern,  of  the  senate,  speaker  of  the  assembly,  chairman 
of  the  senate  finance  committee,  chairman  of  the  assembly 
finance  committee,  and  three  other  persons,  none  of  whom 
shall  be  a  member  of  the  faculty  of  the  university  of  Wis- 
consin, appointed  by  the  governor  and  approved  by  the  senate, 
constitute  the  board  of  public  affairs. 

Sec.  1 5.03.  ( i )  On  or  before  the  first  day  of  February  in 
each  odd-numbered  year  the  governor,  by  and  with  the  advice 
and  consent  of  the  senate,  shall  appoint  the  three  appointive 
members  of  such  board,  each  for  a  term  of  two  years  from 
the  said  first  day  of  February. 

(2)  A  vacancy  in  the  office  of  any  appointed  member  shall 
be  filled  by  appointment  by  the  governor  for  the  unexpired 
term,  subject  to  confirmation  by  the  senate,  but  any  such  ap- 
pointment shall  be  in   full   force  until  acted  upon  by  the 
senate. 

(3)  The  governor  may  at  any  time  remove  the  appointed 
members  of  such  board  for  inefficiency,  neglect  of  duty,  or 
malfeasance  in  office,  in  the  same  manner  as  provided  in  para- 
graph b,  of  section  1797-1,  of  the  statutes. 

108 


BUDGETARY  LEGISLATION 

Sec.  15.04.  The  board  shall  keep  its  offices  in  the  state 
capitol.  The  governor  shall  be  chairman  and  executive  offi- 
cer of  the  board  and  as  such  shall  be  responsible  for  executing 
the  duties  imposed  upon  the  board  and  the  program  author- 
ised by  it  and  the  board  shall  elect  a  vice  chairman  to  act  in 
the  absence  of  the  governor. 

Sec.  15.05.  (i)  Such  board  may  appoint  a  secretary, 
who  shall  be  a  man  of  experience  and  character  that  qualify 
him  to  direct  investigations  into  the  operation  of  public  bodies 
and  into  the  business  and  financial  methods  employed  by  them, 
to  prepare  blanks  for  budget  estimates,  and  to  perform  all 
other  duties  required  by  such  office. 

(2)  The  secretary,  experts  and  accountants  employed  by 
the  board  shall  not  be  subject  to  the  operation  of  chapter 
1 6  relating  to  the  civil  service. 

Sec.  15.06.  ( i )  Each  member  of  the  board,  for  the  pur- 
poses mentioned  in  this  chapter  may  administer  oaths,  certify 
to  official  acts,  issue  subpoenas,  compel  the  attendance  of  wit- 
nesses and  the  production  of  papers,  books,  accounts,  docu- 
ments and  testimony.  In  case  of  disobedience  on  the  part 
of  any  person  to  comply  with  any  order  of  the  board  or  any 
member  thereof  or  any  subpoena  issued  in  behalf  of  such 
board,  or  on  the  refusal  of  any  witness  to  testify  to  any 
matters  regarding  which  he  may  be  lawfully  interrogated, 
it  shall  be  the  duty  of  the  circuit  court  of  any  county,  or  the 
judge  thereof,  on  application  of  a  member  of  the  board  to 
compel  obedience  by  attachment  proceedings  for  contempt, 
as  in  the  case  of  disobedience  of  the  requirements  of  a  sub- 
poena issued  from  such  court,  or  a  refusal  to  testify  therein. 

(2)  The  board  or  any  party  in  any  investigation  conducted 
under  this  chapter,  may  cause  the  depositions  of  witnesses 
residing  within  or  without  the  state  to  be  taken  in  the  man- 
ner prescribed  by  law  for  taking  depositions  in  civil  actions 
in  circuit  court. 

Sec.  15.07.  Each  witness  who  appears  before  the  board  by 
its  order  shall  receive  for  his  attendance  the  fees  and  mileage 
provided  for  witnesses  in  civil  cases  in  courts  of  record,  which 
shall  be  audited  and  paid  upon  the  presentation  of  proper 
vouchers  sworn  to  by  such  witnesses  and  approved  by  the 
chairman  of  the  board.  But  no  witness  subpoenaed  at  the 
instance  of  parties  other  than  the  board  shall  be  entitled  to 
compensation  from  the  state  for  attendance  or  travel,  unless 

109 


BUDGETARY  REFORM  IN  THE  STATES 

the  board  certifies  that  his  testimony  was  relevant  and  ma- 
terial to  the  matter  investigated. 

Sec.  15.08.  (i)  The  board  may  adopt  and  publish  rules 
to  govern  the  proceedings,  and  to  regulate  the  mode  and  man- 
ner of  all  investigations  made  by  it  and  under  its  direction, 
and  of  all  hearings  held  before  it.  The  records  of  the  board, 
including  records  of  time  and  money  spent  upon  the  board's 
investigation  and  other  work,  shall  be  open  to  public  inspec- 
tion subject  only  to  reasonable  regulations. 

(2)  A  full  and  complete  record  shall  be  kept  of  all  pro- 
ceedings had  before  the  board  of  any  investigation  had  under 
the  provisions  of  this  chapter  and  all  testimony  shall  be  taken 
down  by  the  stenographer  appointed  by  the  board. 

Sec.  15.09.  Every  public  body  shall  give  free  access  to  its 
accounts  to  the  board,  and  to  its  employees  when  acting  under 
the  authority  of  the  board,  and  shall  without  compensation, 
upon  written  request  from  such  board  or  any  member  thereof, 
furnish  such  facts  and  information  as  shall  be  within  the 
knowledge  of  such  public  body  or  any  employee  therein,  or 
contained  in  any  accounts  or  investigations  in  the  office  or 
under  the  control  of  such  public  body. 

Sec.  15.10.  Every  public  body  shall  employ  economical, 
efficient  and  accurate  methods  in  the  conduct  of  its  affairs 
and  accounts,  and  such  as  shall  result  in  a  reasonable  harmony 
with  all  other  such  public  bodies;  shall  keep  such  accounts  as 
adequately  disclose  its  affairs ;  and  shall  make  such  reports  at 
such  times  as  are  reasonably  necessary,  and  in  such  form  as 
adequately  discloses  the  facts  relating  to  the  exercise  of  its 
jurisdiction. 

Sec.  15.11.  (i)  The  board  shall  have  such  supervision 
of  every  public  body  as  is  necessary  to  secure  uniformity  and 
accuracy  of  accounts.  It  may  inquire  into  the  methods  of 
conducting  the  affairs  of  any  public  body;  it  may  prescribe 
and  direct  the  use  of  such  forms  of  accounts  as  may  be  nec- 
essary to  carry  out  the  purposes  of  this  chapter;  it  may  pre- 
scribe and  direct  the  use  of  standards  and  records  of  efficiency 
of  employees;  it  shall  inaugurate,  supervise  and  conduct  ade- 
quate systems  of  examination  and  inspection  of  accounts  of 
every  such  public  body;  it  may  cause  to  be  prepared  suitable 
blanks,  books  and  records  for  carrying  out  the  purposes  of  this 
chapter;  and  shall,  when  necessary,  furnish  such  blanks  and 
records  to  any  such  public  body ;  provided,  that  when  the  ex- 

no 


BUDGETARY  LEGISLATION 

pense  of  such  blanks,  books  or  records  has  been  charged 
against  the  appropriation  for  the  board  of  public  affairs  the 
secretary  of  state  shall  charge  the  cost  of  supplies  so  furnished 
against  the  general  appropriation  account  of  the  public  body 
receiving  the  same  and  shall  credit  the  appropriation  of  the 
board  of  public  affairs  with  a  like  amount. 

(2)  The  board  shall  devise  for  all  public  bodies  uniform 
systems  of  accounts  and  uniform  accounting  procedures  ade- 
quate to  record  in  detail  all  transactions  affecting  the  acquisi- 
tion, custodianship  and  disposition  of  values,  including  cash 
receipts  and  disbursements,  and  every  such  public  body 
shall  keep  its  accounts  and  maintain  its  accounting  pro- 
cedure accurately  and  faithfully  as  prescribed  and  directed  by 
the  board. 

Sec.  15.12.  (i)  Not  later  than  July  i,  in  each  even- 
numbered  year,  the  board  shall  distribute  to  each  public  body 
the  proper  forms  necessary  to  preparation  of  budget  estimates 
which  shall  show  the  actual  revenues  and  expenses  including 
accruals  of  all  public  bodies  for  at  least  the  two  prior  fiscal 
years  and  shall  show  in  corresponding  detail  the  estimated 
revenues  and  expenses  including  accruals  for  all  public  bodies 
for  the  succeeding  biennial  period  and  shall  further  show 
whether  and  in  what  amounts  the  estimates  are  larger  or 
smaller  than  the  corresponding  items  of  expenditures  for  each 
of  the  years  included  in  the  budget  report. 

(2)  Not  later  than  September  i,  in  each  even-numbered 
year,  each  public  body  shall  return  to  the  board  its  estimates 
of  the  succeeding  biennium  with  full  explanation  of  reasons 
for  changes  above  or  below  the  corresponding  items  for  the 
previous   biennium.     The  estimates   from   all  public  bodies 
shall  be  immediately  compiled  under  direction  of  the  board  and 
reviewed  by  means  of  such  field  examinations  and  interviews 
or  correspondence  as  may  be  necessary  to  secure  full  in- 
formation. 

(3)  The  results  of  these  examinations  together  with  the 
estimates  and  departmental  explanations  shall,  between  the 
tenth  day  of  November  and  the  first  day  of  December,  in  each 
even-numbered  year,  be  laid  before  the  whole  board  which 
shall  not  divide  into  committee  for  such  review.   The  governor 
elect  shall  be  invited  and  shall  have  the  right  to  be  present  at 
such  meetings  or  to  have  a  representative  attend  and  shall  be 
given  such  information  as  the  board  possesses.     All  reports 

in 


BUDGETARY  REFORM  IN  THE  STATES 

and  information  sent  to  members  of  the  board  shall  be  sent 
to  the  governor-elect. 

(4)  Not  later  than  December  15,  in  each  even-numbered 
year,  the  board  shall  recommend  to  the  legislature  a  budget, 
which,  in  addition  to  giving  comparison  of  estimates  for  the 
succeeding  biennium  with  each  of  the  years  included  in  the 
budget  report,  shall  also  give  the  amounts  which  the  board 
recommends,  item  for  item,  with  columns  showing  whether 
the  recommended  allowances  are  equal  to,  above  or  below  the 
amounts  requested  and  whether  they  are  equal  to,  above  or 
below  the  amounts  for  the  first  year  of  the  preceding  biennium 
together  with  explanatory  notes  which  will  show  the  board's 
reasons  for  recommending  allowances  and  disallowances.  With 
the  printed  recommendations  and  reasons  for  recommenda- 
tions shall  be  included  a  record  of  the  vote  upon  each  recom- 
mendation, where  such  vote  is  not  unanimous.     The  report 
shall  include  any  recommendations  which  a  minority  or  the 
governor-elect  may  wish  to  have  included  in  the  report. 

(5)  Not  later  than  January  i,  in  each  odd-numbered  year, 
copies  of  the  estimates  with  the  board's  recommendations  shall 
be  distributed  to  members  of  the  legislature  next  to  con- 
vene. 

Sec.  15.13.  The  board  shall  also  investigate  duplication  of 
work  of  public  bodies  and  the  efficiency  of  the  organization 
and  administration  of  such  public  bodies  and  shall  formulate 
plans  for  the  greater  coordination  of  such  public  bodies  and 
the  improvement  of  state  administration  in  general.  The 
board  shall  report  the  results  of  such  investigations  to  the 
legislature  with  specific  printed  recommendations  giving  in  de- 
tail the  reasons  therefor.  In  all  reports  published  or  otherwise 
submitted  by  the  board  the  conclusions  or  recommendations 
shall  be  accompanied  by  a  summary  of  the  facts  upon  which 
the  conclusion  or  -findings  are  based,  the  names  of  the  members 
of  the  board  who  approved  the  report  and  a  summary  of  the 
investigation  pursued  to  secure  the  facts.  Where  the  board 
is  not  unanimous  in  its  recommendations  or  findings,  a  sum- 
mary of  the  minority  position  shall  be  included  with  the  ma- 
jority report. 

Sec.  15.14.  The  jurisdiction  of  the  governor  and  attor- 
ney-general imposed  and  conferred  by  section  14.56  (sic)*  of 

*  Section  14.66.  The  governor  and  attorney-general  shall,  at  least 
once  in  each  quarter  year,  and  at  such  other  times  as  the  governor  may 

112 


BUDGETARY  LEGISLATION 

the  statutes,  are  imposed  and  conferred  upon  the  board  of 
public  affairs. 

Sec.  15.15.  The  jurisdiction  of  any  public  body  relating 
to  the  employment  of  accountants  in  the  examination  of  ac- 
counts is  hereby  imposed  and  conferred  upon  the  board  of 
public  affairs,  and  the  cost  of  such  examination  shall  be 
charged  against  the  proper  appropriation  for  the  public  body 
whose  accounts  are  examined. 

Sec.  15.16.  Any  person  violating  any  of  the  provisions 
of  sections  15.01  to  15.15  inclusive,  shall  be  deemed  guilty 
of  a  misdemeanor,  and  upon  conviction  thereof,  shall  be  pun- 
ished by  a  fine  of  not  less  than  ten  dollars  nor  more  than 
one  hundred  dollars,  or  by  imprisonment  in  the  county  jail 
for  not  more  than  three  months. 

Vermont.     In  1915,  Vermont  joined  the  list  of  states  **r 
making  provision  for  the  use  of  a  budget  in  the  administra-     ^ 
tion  of  its  financial  affairs.     By  an  act  approved  March  6,** 
of  that  year  it  provided  for  the  creation  of  a  Committee  on 
Budget  which  should  have  the  duty  of  receiving,  compiling 
and  presenting  to  the  legislature  a  consolidated  statement  of 
estimates    of    appropriations    and    revenues.      This    act   was 
amended  March  21,  1917,  in  several  particulars: 

In  more  than  one  respect  this  law  is  an  exceedingly  inter- 
esting enactment.  Unusual  pains  have  been  taken  to  ensure 
that  the  budget  to  be  prepared  by  the  Committee  on  Budget 
shall  be  a  comprehensive  document.  Not  only  is  it  provided 
that  all  departments  shall  submit  their  estimates  of  expendi- 
tures to  this  body  but  that  they  shall  make  their  requests  in 
no  other  way  unless  the  need  arises  after  the  budget  has  been 
prepared.  Thus  section  5  of  the  act  provides  that : — 

No  state  officer,  department  or  institution  shall  apply  to  the 
legislature  for  any  appropriation  unless  a  request  for  the 

elect,  examine  and  see  that  all  the  money  appearing  by  the  books  of  the 
secretary  of  state  and  state  treasurer  as  belonging  to  the  several  funds 
is  in  the  vaults  of  the  treasury  or  in  the  several  state  depositories,  and 
in  case  of  a  deficiency  shall  require  the  treasurer  to  make  up  such  de- 
ficiency immediately;  and  if  such  treasurer  shall  refuse  or  neglect  for 
ten  days  thereafter  to  have  the  full  sum  belonging  to  said  funds  in  the 
treasury  the  attorney-general  shall  institute  proceedings  to  recover  the 
same. 

"3 


BUDGETARY  REFORM  IN  THE  STATES 

same  has  been  filed  with  the  secretary  of  the  Committee  in 
accordance  with  the  provisions  of  this  act;  unless  the  occa- 
sion for  such  request  shall  have  arisen  subsequent  to  the  first 
day  of  November  in  the  year  next  preceding  the  session  of  the 
legislature,  at  which  the  same  is  requested. 

Furthermore,  it  is  provided  that  the  Budget  Committee  shall 
take  due  notice  of  all  claims  against  the  state  and  of  all  bills 
introduced  in  the  legislature  calling  for  an  appropriation  and 
shall  prepare  a  schedule  of  such  calls  for  appropriations  and 
add  the  same  to  the  budget  to  the  end  that  the  latter  will 
represent  a  complete  statement  of  expenditure  proposals  to  be 
acted  upon  by  the  legislature. 

In  like  manner  it  is  provided  that  the  committee  shall  pre- 
pare as  a  part  of  its  budget — 

a  statement  showing  the  revenues  of  the  state  for  the  current 
biennial  fiscal  period  to  date  and  the  next  two  preceding  bi- 
ennial fiscal  periods,  from  whence  such  revenues  were  derived, 
and  a  statement  of  the  expenditures  of  each  department  of 
state,  with  an  itemized  account  of  the  purpose  thereof  for  the 
current  biennial  fiscal  period  to  date  and  the  next  two  pre- 
ceding biennial  fiscal  periods  in  such  manner  and  form  as  to 
enable  a  comparison  with  the  revenues  and  expenditures  of 
each  of  the  three  periods,  so  tabulated,  with  the  ensuing  bi- 
ennial fiscal  period. 

Secondly,  it  should  be  noted  that  this  committee  is  no  mere 
compiling  agency.  It  is  expressly  directed  to  revise  all  esti- 
mates and  to  give  its  opinion  regarding  what  expenditures 
should  be  authorized.  That  this  opinion  may  be  one  of  value 
the  committee  is  empowered  to  make  such  examinations  into 
the  organization  and  work  of  the  departments  and  institutions 
and  their  needs  as  it  deems  fit. 

In  this  connection  it  should  be  pointed  out  that  the  commit- 
tee has  been  given  such  broad  duties  and  powers  that  it  is 
much  more  than  a  mere  budget  committee  in  the  narrow  sense. 
Thus  the  provision  that  the  committee 

shall  have  authority  to  take  any  means  it  deems  necessary 

114 


BUDGETARY  LEGISLATION 

to  enforce  the  provisions  of  the  budget  and  ascertain  whether 
or  not  such  departments  and  institutions  are  being  operated 
at  a  minimum  expense  consistent  with  efficiency  and  within 
the  appropriations  as  provided  in  the  budget,  and  may  make 
such  suggestions  and  orders  as  it  deems  advisable, 

makes  of  this  body  a  permanent  commission  on  economy  and 
efficiency. 

Again  Section  14,  which  empowers  the  committee  to  au- 
thorize expenditures  for  unforeseen  circumstances  makes  of 
the  committee  an  emergency  board  such  as  is  possessed  by 
certain  other  states. 

Another  provision  of  the  act  meriting  attention  is  that  which 
provides  for  the  assembling  of  all  appropriations  in  a  single 
consolidated  appropriation  act.  This  provision  has  the  merit 
of  making  it  possible,  not  only  for  officers  of  the  government, 
but  for  the  public  generally,  readily  to  determine  what  ap- 
propriations have  been  made. 

Much  the  most  noteworthy  provision  of  the  act,  however, 
is  the  character  of  the  composition  of  the  committee.  It  is 
made  to  consist  of  the  Governor,  as  chairman,  the  auditor  of 
accounts,  the  state  treasurer  and  other  members  of  the  board 
of  control,  and  the  chairmen  of  the  senate  committee  on 
finance  and  the  house  committees  on  ways  and  means  and  ap- 
propriations. The  committee  is  thus,  in  effect,  a  joint  com- 
mittee composed  of  ex-officio  members  of  the  legislative  and 
executive  branches  of  the  government.  This  arrangement 
has  these  advantages:  it  establishes  close  working  relations 
between  the  legislative  and  executive  branches;  it  ensures  that 
there  will  be  on  the  floor  of  the  two  houses  officers  responsible 
in  part  for  the  framing  of  the  estimates  to  explain  and  de- 
fend them ;  and  it  renders  more  likely  that  the  budgetary  pro- 
posals as  formulated  will  be  adopted  with  a  minimum  of 
change. 

On  the  other  hand,  this  provision  has  the  very  serious 
disadvantage  that,  instead  of  emphasizing  the  responsibility 
of  the  Governor  as  head  of  the  administration  it  detracts 

"5 


BUDGETARY  REFORM  IN  THE  STATES 

seriously  from  his  powers.  The  budget  as  prepared  is  not  the 
Governor's  budget.  He  participates  in  its  preparation  only  as 
he  is  a  member  of  the  committee.  In  thus  failing  to  vest 
squarely  in  the  hands  of  the  Governor  the  duty  of  formulating 
the  financial  and  work  program  for  consideration  by  the  legis- 
lature, the  act  runs  counter  to  one  of  the  most  vital  principles 
of  budgetary  reform.  Placing  the  chairmen  of  the  three  com- 
mittees dealing  with  financial  matters  on  this  committee,  which 
as  we  have  seen  has  important  administrative  powers,  means 
that  these  chairmen  are  made  administrative  officials. 

It  is  impossible  to  foretell  how  this  arrangement  will  work 
out  and  it  will  be  interesting  to  watch  its  results  in  practical 
operation. 

The  act,  as  amended  in  1917,.  reads  as  follows: 

An  Act  to  create  a  Committee  on  Budget.  Approved,  March 
6,  1915.  (Acts  of  1915,  No.  26.)  Amended  by  Act  ap- 
proved March  21,  1917.  (Acts  of  1917,  No.  32.) 

Section  i.  [As  amended  by  Act  approved  March  21, 
1917.]  The  members  of  the  board  of  control  (a),  the  auditor 
of  accounts,  the  chairman  of  the  finance  committee  of  the  sen- 
ate, chairman  of  the  ways  and  means  committee  of  the  house 
of  representatives  and  chairman  of  the  appropriation  commit- 
tee of  the  house  of  representatives  shall  constitute  a  committee 
on  budget;  provided,  however,  that  the  chairman  of  such  a 
committee  may  designate  a  member  of  such  committee  who 
shall  be  a  member  of  the  committee  on  budget  in  lieu  of  said 
chairman.  The  governor  shall  be  the  chairman  of  the  commit- 
tee on  budget  and  the  auditor  of  accounts  its  secretary.  Said 
secretary  shall  keep  the  minutes  of  each  meeting  of  the  com- 
mittee in  a  book  kept  for  that  purpose  and  such  minutes  shall 
be  a  public  record.  The  members  of  such  committee  shall  re- 
ceive their  necessary  expenses  incurred  in  the  performance  of 

(a)   Section  i  of  the  act  approved  March  21,  1917  provides  that: 

The  board  of  control  shall  consist  of  the  governor,  state  treasurer, 

auditor  of  accounts,  director  of  state  institutions  and  a  person  to  be 

appointed  biennially  by  the  governor  with  the  advice  and  consent 

of  the  senate. 

116 


BUDGETARY  LEGISLATION 

their  duties,  and  the  chairman  of  the  committee  of  the  senate 
and  house  of  representatives  herein  mentioned  or  members 
designated  by  said  chairman,  shall  each  receive  four  dollars  a 
day  for  time  actually  spent  in  the  performance  of  their  duties 
while  the  General  Assembly  is  not  in  session.  Said  secretary 
may  expend  such  sums  as  the  board  of  control  deems  nec- 
essary for  clerical  assistance  in  carrying  out  the  provisions  of 
this  act,  but  such  expenditure  shall  not  exceed  five  hundred 
dollars  in  any  biennial  fiscal  period. 

Sec.  2.  During  the  month  of  October  in  each  even  year, 
there  shall  be  filed  with  the  secretary  of  the  committee  by 
each  individual  or  department  of  state  requiring  appropria- 
tions, upon  forms  prepared  and  furnished  by  the  committee, 
statements  showing  in  detail  the  amount  appropriated  and  ex- 
pended for  the  current  biennial  fiscal  period  to  date,  and 
the  two  next  preceding  biennial  fiscal  periods ;  and  the  amounts 
required  by  such  individual  or  department  of  state  requiring 
appropriations  for  the  ensuing  biennial  fiscal  period,  arranged 
in  proper  manner  in  detail  by  classification  and  by  proper  sum- 
maries as  may  be  required  by  the  committee. 

The  term  * 'biennial  fiscal  period"  as  used  in  this  act  shall  be 
the  period  of  the  two  fiscal  years  which  ends  in  the  biennial 
year. 

Sec.  3.  Such  statement  of  moneys  required  for  the  sup- 
port, maintenance,  extension  or  improvement  of  the  several 
departments  of  state  shall  show  the  needs  under  the  following 
heads  as  nearly  as  may  be: 

(a)  Salaries  and  wages,  subdivided  so  as  to  show  the 
number  employed  and  the  wages  or  salaries  paid ;  the  proposed 
increase  or  decrease,  and  any  proposed  new  positions. 

(b)  Permanent  improvements,  such  as  new  buildings,  new 
departures  or  other  proper  investment.    In  case  of  new  build- 
ings, statement  of  size,  manner  of  construction  and  estimate 
of  cost  and  the  immediate  need  of  the  buildings.    All  requests 
under  this  classification  shall.be  fully  itemized  and  explained 
so  that  the  committee  may  judge  fully  as  to  the  necessity 
and  advisability  for  the  same. 

(c)  All  other  expenditures,  such  as  replacements,  repairs 
and  supplies  properly  arranged,  itemized  and  classified. 

(d)  Contingencies.     All  requests  to  be  accompanied  by 
schedules  and  explanations  showing  exactly  how  the  money, 
requested  is  to  be  expended  and  the  necessity  therefor. 


BUDGETARY  REFORM  IN  THE  STATES 

Said  committee  may  at  any  time  require  further  detail, 
itemization  or  explanation,  as  to  any  request  made  under  this 
section. 

Sec.  4.  The  secretary  of  the  committee  shall  also  receive 
and  file  a  statement  of  any  desired  appropriation,  for  any 
purpose,  which  may  be  presented  to  him  during  the  month  of 
October  of  each  even  year  by  any  individual,  corporation,  as- 
sociation or  institution,  including  municipal  corporations,  in- 
tending to  present  the  same  at  the  next  session  of  the  legis- 
lature. The  committee  shall  make  all  necessary  investigation 
in  relation  thereto  and  shall  present  the  same  in  the  budget 
hereinafter  provided  for,  with  their  recommendations  and  sug- 
gestions. 

Sec.  5.  A  person  having  a  claim  against  the  state  re- 
quiring action  by  the  legislature  shall,  in  like  manner,  file 
with  the  secretary  of  the  committee  a  statement  of  the  amount 
of  the  claim,  together  with  a  full  statement  of  the  facts  upon 
which  the  claim  is  based.  The  committee  shall  make  all 
necessary  investigation  in  relation  thereto  and  shall  present 
the  same  in  the  budget  hereinafter  provided  for,  with  their 
recommendations  and  suggestions. 

Sec.  6.  No  state  officer,  department  or  institution  shall 
apply  to  the  legislature  for  any  appropriation  unless  a  request 
for  the  same  has  been  filed  with  the  secretary  of  the  com- 
mittee in  accordance  with  the  provisions  of  this  act;  unless 
the  occasion  for  such  request  shall  have  arisen  subsequent  to 
the  first  day  of  November  in  the  year  next  preceding  the 
session  of  the  legislature,  at  which  the  same  is  requested. 

Sec.  7.  At  any  time  the  committee  may,  without  notice, 
visit  and  examine  the  affairs  of  any  department,  institution, 
public  work,  commission  or  office  of  the  state  for  the  purpose 
of  ascertaining  the  facts  and  to  make  findings  and  recom- 
mendations relative  to  increasing  the  efficiency  and  curtailing 
the  expense  thereof. 

Sec.  8.  Before  making  the  budget  herein  provided  for, 
the  committee  shall  examine  all  requests  for  appropriations 
and  for  the  allowance  of  claims  made  in  accordance  with  this 
act  and  may  hold  such  hearings,  either  public  or  private,  as 
it  deems  advisable. 

Sec.  9.  The  committee  shall,  during  the  month  of  No- 
vember of  each  even  year,  prepare  a  statement  showing  the 
revenues  of  the  state  for  the  current  biennial  fiscal  period  to 

118 


BUDGETARY  LEGISLATION 

date  and  the  next  two  preceding  biennial  fiscal  periods,  from 
whence  such  revenues  were  derived,  and  a  statement  of  the 
expenditures  of  each  department  of  state,  with  an  itemized  ac- 
count of  the  purpose  thereof,  for  the  current  biennial  fiscal 
period  to  date  and  the  next  two  preceding  biennial  fiscal  peri- 
ods in  such  manner  and  form  as  to  enable  a  comparison  with 
the  revenues  and  expenditures  of  each  of  the  three  periods,  so 
tabulated,  with  the  ensuing  biennial  fiscal  period. 

Sec.  10.  During  such  month  of  November  the  committee 
shall  make  an  estimate  of  the  revenues  of  the  state  to  be  re- 
ceived during  the  ensuing  biennial  fiscal  period,  with  an  item- 
ized statement  of  the  sources  thereof,  and  shall  also  ascertain 
and  report  the  amounts  of  all  unexpended  balances  under 
appropriations  heretofore  made,  and  shall  prepare  an  estimate 
or  budget  of  the  amounts  required  to  be  appropriated  by  the 
legislature  for  the  conduct  of  the  public  business  of  the  state 
in  all  its  offices,  institutions  and  departments  for  the  biennial 
fiscal  period  next  ensuing.  Such  budget  shall  be  prepared 
with  sufficient  detail  to  show  the  aggregate  sum  and  the  items 
thereof  estimated  to  be  necessary  for  the  maintenance  and  sup- 
port of  each  office,  institution  and  department  of  state  for  the 
ensuing  biennial  fiscal  period.  The  committee  shall  have  the 
power  in  making  such  estimate,  to  revise,  increase,  decrease 
or  eliminate  the  sum  required  by  any  officer,  institution  or 
department,  or  by  any  person  or  institution  filing  a  request  for 
an  appropriation  or  the  allowance  of  a  claim  made  in  accord- 
ance with  this  act;  but  the  committee  shall  include  in  its  re- 
port the  substance  of  such  requests  and  the  reasons  for  its 
action  thereon. 

Sec.  IT.  When  the  estimates  and  statements  heretofore 
provided  for  in  this  act  have  been  completed,  the  committee 
shall  cause  the  same  to  be  printed  together  with  such  recom- 
mendations as  it  deems  best  and  a  copy  thereof  forwarded  to 
each  member-elect  of  the  incoming  general  assembly  before 
the  tenth  day  of  December  of  each  even  year  and  shall  also 
forward  at  least  one  copy  to  the  clerk  of  each  town  in  the  state, 
who  shall  place  the  same  on  file  in  his  office. 

Sec.  12.  Upon  the  convening  of  the  next  general  assem- 
bly, the  newly  formed  committee  on  budget  shall  receive  the 
statements  and  estimates  hereinbefore  provided  from  the  out- 
going committee  on  budget,  and  upon  examination  of  the 
same  shall  make  such  further  revision  as  the  committee  shall 

119 


BUDGETARY  REFORM  IN  THE  STATES 

deem  advisable;  and  shall  make  a  consolidated  statement  of 
the  same,  which  shall  show,  with  such  detail  as  the  committee 
deems  advisable,  the  income  and  expenditures  of  the  state  for 
the  three  preceding  biennial  fiscal  periods  and  an  estimate  of 
the  income  and  expenditures  of  the  state  in  all  its  depart- 
ments for  the  ensuing  biennial  fiscal  period.  Immediately 
after  the  time  limited  by  the  general  assembly  for  the  intro- 
duction of  bills,  the  committee  shall  prepare  a  statement  show- 
ing a  schedule  of  all  amounts  contemplated  to  be  appropriated 
by  the  various  bills  introduced  to  that  date,  together  with  the 
recommendations  of  the  committee  as  to  the  advisability  there- 
of and  the  same  shall  be  added  to  the  revised  consolidated 
statement  herein  provided  for. 

Upon  the  disposal  of  such  proposed  appropriations,  such  of 
them  as  have  been  passed  shall  be  added  to  the  consolidated 
statement  and  the  committee  shall  draft  such  consolidated 
statement  as  a  bill,  which  shall  be  presented  to  the  general 
assembly  for  its  consideration,  revision  and  ultimate  passage 
as  the  budget  bill,  and  which  shall  contain  all  the  expenditures 
of  the  state  in  all  its  departments  during  the  ensuing  biennial 
fiscal  period. 

Sec.  13.  The  committee  on  budget  shall  meet  at  Montpe- 
lier  at  least  every  six  months  and  oftener  if  requested  by  the 
governor,  and  shall  examine  the  financial  condition  of.,  all 
state  departments  and  institutions  and  shall  have  authority 
to  take  any  means  it  deems  necessary  to  enforce  the  pro- 
visions of  the  budget  and  ascertain  whether  or  not  such  de- 
partments and  institutions  are  being  operated  at  a  minimum 
expense  consistent  with  efficiency  and  within  the  appropria- 
tions as  provided  in  the  budget,  and  may  make  such  sugges- 
tions and  orders  as  it  deems  advisable. 

Sec.  14.  The  committee  on  budget  shall  have  the  au- 
thority to  make  any  expenditures  necessitated  by  unforeseen 
circumstances  or  emergencies  and  may  pledge  the  credit  of 
the  state  for  the  same,  and  when  any  building  or  property  of 
the  state  is  damaged  or  destroyed  by  fire,  the  committee  may 
use  any  moneys  received  from  insurance  on  said  building 
or  property  for  the  purpose  of  replacing,  repairing  or  rebuild- 
ing the  same  and  may  borrow  on  the  credit  of  the  state  such 
further  sums  as  may  be  necessary  to  replace,  repair  or  re- 
build such  building  or  property,  and  all  sums  of  money  used 
under  the  provisions  of  this  section  are  hereby  appropriated 
for  the  purposes  mentioned  in  this  section. 

120 


BUDGETARY  LEGISLATION 

All  moneys  used  and  expended  under  the  provisions  of  this 
section  shall  be  included  in  the  budget  for  the  next  biennial 
fiscal  period.  The  committee  on  budget  shall  render  an  item- 
ized statement  accompanied  by  vouchers  of  the  expenditure  of 
all  such  moneys  and  the  auditor  of  accounts  shall  print  such 
statement  in  his  biennial  report. 

Sec.   15.     No.  232  of  the  acts  of  1910  is  hereby  repealed. 

Sec.   1 6.     This  act  shall  take  effect  from  its  passage. 

North  Dakota.  On  practically  the  same  date  (March 
1915,"  instead  of  March  6,  1915)  that  Vermont  passed  its 
act  providing  for  a  Committee  on  Budget,  composed  of  the 
Governor  as  chairman,  certain  administrative  officers  and  the 
chairman  of  the  finance  and  appropriation  committee  of  the 
legislature,  North  Dakota  passed  an  act  creating  a  strikingly 
similar  body  known  as  the  State  Budget  Board.  As  in  the 
case  of  Vermont  this  body  was  given  the  duty  of  securing 
the  estimates  of  expenditures  as  prepared  by  the  spending  de- 
partments, of  holding  hearings  upon  them  and  of  compiling 
and  submitting  to  the  legislature  a  budget  representing  its 
opinion  as  to  the  expenditure  grants  that  should  be  made. 

In  our  analysis  of  the  Vermont  act  we  have  pointed  out  how 
this  system  fails  to  meet  the  requirements  of  a  proper  bud- 
getary procedure.  The  chief  points  of  criticism  were:  the 
failure  to  distinguish  clearly  between  the  responsibility  for 
the  formulation  of  a  budgetary  program  and  that  of  taking 
action  upon  such  program;  the  granting  of  participation  in 
the  performance  of  the  first  act  in  offices  of  the  legislative 
branch  instead  of  vesting  responsibility  squarely  upon  the 
executive  branch,  and  the  failure  to  make  the  Governor,  as 
head  of  the  administration,  the  chief  budgetary  officer,  with 
the  budget  board  as  his  agent  to  assist  him  in  the  performance 
of  this  duty.  The  reasons  supporting  these  criticisms  have 
been  so  fully  given  in  describing  the  Vermont  act  that  they 
need  not  be  repeated  here. 

Following  is  a  copy  of  the  North  Dakota  act : 

An  Act  providing  for  the  preparation  of  the  State  Budget; 

121 


BUDGETARY  REFORM  IN  THE  STATES 

creating  a  State  Budget  Board,  etc.     Approved,  March  3, 
1915.     (Acts  of  1915,  Chapter  61.) 

Section  i.  There  shall  be,  and  there  is  hereby,  constituted 
and  established  a  State  Budget  Board  which  shall  be  composed 
of  five  members,  as  follows :  The  Governor,  the  chairman 
of  the  Appropriations  Committee  of  the  Senate  of  the  pre- 
ceding legislative  assembly,  the  chairman  of  the  Appropria- 
tions Committee  of  the  House  of  Representatives  of  the  said 
legislative  assembly,  the  State  Auditor  and  Attorney  General. 
In  case  of  inability  to  serve  on  said  board  on  the  part  of  any 
such  person  the  vacancy  shall  be  filled  by  the  Governor  by 
appointment  from  the  membership  of  the  preceding  legisla- 
tive assembly.  The  board  shall  meet  and  organize  in  the 
Governor's  office,  at  the  State  Capitol,  on  the  third  Tuesday 
in  November,  1916.  The  Governor  shall  be  chairman  of  the 
board  and  the  State  Auditor  shall  be  its  secretary.  The  secre- 
tary shall  keep  the  minutes  of  the  board  and  shall  record 
them  in  a  suitable  book  to  be  kept  for  that  purpose.  The 
minutes  of  the  board  shall  be  a  public  record  and  shall  at 
all  times  be  open  to  public  inspection.  The  members  of  the 
board  shall  be  paid  their  actual  and  necessary  expense  incurred 
in  the  performance  of  the  work  and  in  addition  thereto  the  said 
chairman  of  the  Appropriations  Committee  of  the  Senate,  the 
chairman  of  the  Appropriations  Committee  of  the  house  of 
representatives  or  such  other  member  or  members  appointed 
by  the  Governor  to  fill  the  vacancy,  shall  each  receive  five 
dollars  per  day  for  each  day  of  actual  service  and  traveling 
expenses  necessarily  incurred. 

Sec.  2.  The  State  Budget  Board  may  employ  such  ex- 
pert accountants,  clerks  and  stenographers  as  it  shall  deem 
necessary,  and  fix  their  compensation. 

Sec.  3.  Not  later  than  August  first  of  each  year  next 
preceding  the  session  of  the  legislative  assembly,  the  State 
Auditor  shall  send  to  the  head  of  each  department  of  this 
state  government,  and  to  each  officer,  board  or  commission, 
in  charge  of  any  educational,  charitable,  penal  or  other  in- 
stitution or  undertaking,  supported  wholly  or  in  part  by  ap- 
propriations from  the  State  Treasury,  a  suitable  blank  form 
to  be  filled  out  by  such  head  of  state  department,  officer,  board 
or  commission,  with  an  itemized  statement  of  the  amount  of 
money  which  such  head  of  state  department,  officer,  board 

122 


BUDGETARY  LEGISLATION 

or  commission  considers  necessary  for  the  proper  maintenance, 
extension  or  improvement  of  the  department,  institution  or 
undertaking  in  his  or  their  charge,  during  the  two  fiscal  years 
next  ensuing.  Such  head  of  state  department,  officer, 
board  or  commission,  shall  return  said  blanks,  properly  filled 
out,  on  or  before  the  first  day  of  October  of  each  year  next 
preceding  the  session  of  the  legislative  assembly,  to  the 
State  Auditor,  together  with  such  data  and  statements  as 
may  be  necessary  to  fully  and  clearly  explain  the  purposes 
and  need  of  any  appropriation  which  is  requested  by  such  head 
of  state  department,  officer,  board  or  commission. 

Sec.  4.  The  State  Budget  Board  shall  meet  on  the  third 
Tuesday  in  November  of  each  year  next  preceding  the  meet- 
ing of  the  legislative  assembly  at  the  State  Capitol.  The  State 
Auditor  shall  submit  to  the  board  the  estimates  required  by 
Section  3  of  this  Act  to  be  filed  in  his  office  by  the  head  of 
each  state  department  and  by  various  officers,  boards  and 
commissions.  The  board  shall  thereupon  proceed  to  prepare 
estimates  for  a  State  Budget  of  the  amounts  required  to  be 
appropriated  by  the  state  legislative  assembly  for  the  conduct 
of  the  business  of  the  state  in  all  its  offices,  institutions,  de- 
partments and  undertakings  for  the  two  fiscal  years  next  en- 
suing. Before  making  up  such  estimates  the  board  shall  ex- 
amine all  statements  and  requests  for  appropriations  presented 
to  it,  and  shall  afford  to  the  officers,  boards  and  commissions 
presenting  such  statements,  and  making  such  requests,  rea- 
sonable opportunity  for  explanation  in  regard  thereto  and, 
whenever  requested,  shall  grant  to  such  officers,  boards  or 
commissions  a  hearing  thereon.  All  such  hearings  shall  be 
open  to  the  public.  The  Budget  Board,  or  any  member  or 
members  thereof,  may,  if  the  board  deems  it  advisable,  visit 
any  department,  institution  or  undertaking  for  which  an  ap- 
propriation is  requested,  for  the  purpose  of  examination  and 
investigation.  The  board  may  also  hold  such  public  hearings 
as  in  its  judgment  shall  be  deemed  advantageous  for  the  pur- 
poses of  preparing  said  estimates.  When  said  estimates  have 
been  prepared  they  shall  be  transmitted  to  the  legislative  as- 
sembly not  later  than  the  tenth  day  of  the  session  thereof, 
together  with  such  recommendations,  reasons  and  explanations 
with  regard  to  said  estimates  as  shall  be  deemed  necessary  by 
the  Budget  Board.  The  Budget  Board  shall,  at  the  same 
time,  transmit  to  the  legislative  assembly  all  statements,  esti- 

123!  „&#&*$ 


BUDGETARY  REFORM  IN  THE  STATES 

mates  and  requests,  or  copies  thereof,  which  were  filed  with 
the  State  Auditor  by  officers,  boards  and  commissions  as  re- 
quired by  Section  3  of  this  Act. 

Sec.  5.  In  making  up  the  estimates  to  be  transmitted  to 
the  legislative  assembly  the  Budget  Board  shall,  in  connec- 
tion therewith  and  as  a  part  thereof,  make  an  estimate  of 
all  moneys  required  to  be  raised  or  appropriated  for  the  pay- 
ment of  interest  upon  the  funded  debt  of  the  state  and  its  other 
obligations  bearing  interest,  and  shall  also  make  an  estimate 
of  the  sum  of  money  required  to  be  contributed  in  the  two 
next  ensuing  fiscal  years  to  the  general  sinking  funds  main- 
tained for  the  redemption  and  payment  of  the  debts  of  the 
state,  and  it  shall  be  the  duty  of  the  State  Auditor  to  furnish 
the  Budget  Board  with  a  detailed  statement  of  the  moneys 
necessary  for  such  purposes. 

Sec.  6.  In  connection  with  and  as  a  part  of  the  estimate 
transmitted  by  the  Budget  Board  to  the  legislative  assembly 
the  said  board  shall  transmit  an  estimate  of  the  revenues  of 
the  state  expected  to  be  received  during  the  two  next  ensuing 
fiscal  years  and  may  make  such  recommendation  with  regard 
to  the  disposition  of  said  revenue  as  it  shall  deem  advisable 
and  necessary  to  promote  the  welfare  of  the  state.  The 
Budget  Board  shall  also  transmit  to  the  legislative  assembly  as 
a  part  of  said  estimate,  the  amounts  of  all  unexpended  bal- 
ances under  appropriations  theretofore  made  by  law,  and  may 
make  such  recommendations  to  the  legislative  assembly  rela- 
tive to  the  disposition  of  said  unexpended  balances  as  it 
deems  appropriate. 

Sec.  7.  There  is  hereby  appropriated  out  of  any  moneys 
in  the  state  treasury  not  otherwise  appropriated  the  sum  of 
$2,000  or  so  much  thereof  as  may  be  required  to  carry  out 
the  purposes  of  this  Act. 

South  Dakota.  Two  years  after  Vermont  and  North  Da- 
kota had  passed  their  acts  providing  for  the  creation  of  a 
Budget  Commission  composed  of  representatives  of  the  legis- 
lative and  executive  branches  of  the  government,  on  March 
Vio,  1917,  South  Dakota  enacted  a  law  of  almost  identically 
the  same  character.  As  a  description  of  the  Vermont  and 
North  Dakota  acts  has  already  been  given  and  the  significance 
of  the  policy  represented  by  them  has  been  there  pointed  out, 

124 


BUDGETARY  LEGISLATION 

it  is  necessary  for  us  here  to  do  nothing  more  than  reproduce 
this  act.     It  is  as  follows : 

An  Act  providing  for  the  preparation  of  a  State  budget ;  creat- 
ing a  State  Budget  Board,  etc.  Approved,  March  10,  1917. 
(Acts  of  1917,  Chapter  354). 

Section  i.  There  shall  be,  and  there  is  hereby,  constituted 
and  established  a  State  Budget  Board  which  shall  be  composed 
of  five  members,  as  follows :  The  Governor-elect,  the  Chair- 
man of  the  Appropriations  Committee  of  the  Senate  of  the 
preceding  legislative  assembly,  the  Chairman  of  the  Appro- 
priations Committee  of  the  House  of  Representatives  of  the 
said  legislative  assembly,  the  State  Auditor  and  Chairman  of 
Tax  Commission.  In  case  of  inability  to  serve  on  said  board 
on  the  part  of  any  such  person  the  vacancy  shall  be  filled 
by  the  Governor-elect,  the  person  or  persons  s6  appointed  to 
be  from  a  county,  or  counties,  having  no  State  Institution. 
The  Board  shall  meet  and  organize  in  the  Governor's  office, 
at  the  State  Capitol,  on  the  third  Tuesday  in  November,  1918. 
The  Governor-elect  shall  be  chairman  of  the  board  and  the 
State  Auditor  shall  be  its  secretary.  The  secretary  shall  keep 
the  minutes  of  the  Board  and  shall  record  them  in  a  suitable 
book  to  be  kept  for  that  purpose.  The  minutes  of  the  Board 
shall  be  a  public  record  and  shall  at  all  times  be  open  to  public 
inspection.  The  members  of  the  Board  shall  be  paid  their 
actual  and  necessary  expenses  incurred  in  the  performance 
of  the  work  and  in  addition  thereto  such  other  member,  or 
members,  appointed  by  the  Governor-elect  to  fill  the  vacancy, 
shall  each  receive  five  dollars  per  day  for  each  day  of  actual 
service  and  traveling  expenses  necessarily  incurred. 

Sec.  2.  The  State  Budget  Board  may  employ  such  expert 
accountants,  clerks  and  stenographers  as  it  shall  deem  neces- 
sary, and  fix  their  compensation. 

Sec.  3.  Not  later  than  August  first,  of  each  year,  next 
preceding  the  session  of  the  legislative  assembly,  the  State 
Auditor  shall  send  to  the  head  of  each  department  of  this 
state  government,  and  to  each  officer,  board  or  commission,  in 
charge  of  any  educational,  charitable,  penal  or  other  institution 
or  undertaking,  supported  wholly  or  in  part  by  appropriations 
from  the  State  Treasury,  a  suitable  blank  form  to  be  filled 
out  by  such  head  of  state  department,  officer,  board  or  com- 

125 


BUDGETARY  REFORM  IN  THE  STATES 

mission,  with  an  itemized  statement  of  the  amount  of  money 
which  such  head  of  state  department,  officer,  board  or  com- 
mission considers  necessary  for  the  proper  maintenance,  ex- 
tension or  improvement  of  the  department,  institution  or  un- 
dertaking in  his  or  their  charge,  during  the  two  fiscal  years 
next  ensuing.  Such  head  of  state  department,  officer,  board 
or  commission,  shall  return  said  blanks  properly  filled  out  on 
or  before  the  first  day  of  October  of  each  year  next  preceding 
the  session  of  the  legislative  assembly,  to  the  State  Auditor, 
together  with  such  data  and  statements  as  may  be  necessary 
to  fully  and  clearly  explain  the  purposes  and  need  of  any 
appropriation  which  is  requested  by  such  head  of  state  de- 
partment, officer,  board  or  commission. 

Sec.  4.  The  State  Budget  Board  shall  meet  on  the  fourth 
Tuesday  in  November,  of  each  year  next  preceding  the  meet- 
ing of  the  legislative  assembly  at  the  State  Capitol.  The  State 
Auditor  shall  submit  to  the  board  the  estimates  required  by 
Section  3  of  this  act  to  be  filed  in  his  office  by  the  head  of 
each  state  department  and  by  various  officers,  boards  and 
commissions.  The  Board  shall  thereupon  proceed  to  prepare 
estimates  for  a  State  Budget  of  the  amounts  required  to  be 
appropriated  by  the  State  Legislative  Assembly  for  the  con- 
duct of  the  business  of  the  state  in  all  its  offices,  institutions, 
departments  and  undertakings  for  the  two  fiscal  years  next 
ensuing.  Before  making  up  such  estimates  the  board  shall  ex- 
amine all  statements  and  requests  for  appropriations  presented 
to  it,  and  shall  afford  to  the  officers,  boards  and  commissions 
presenting  such  statements,  and  making  such  requests,  rea- 
sonable opportunity  for  explanation  in  regard  thereto,  and, 
whenever  requested,  shall  grant  to  such  officers,  boards  or 
commissions  a  hearing  thereon.  All  such  hearings  shall  be 
open  to  the  public.  The  Budget  Board,  or  any  member,  or 
members,  thereof,  may,  if  the  board  deems  it  advisable,  visit 
any  department,  institution  or  undertaking  for  which  an  ap- 
propriation is  requested,  for  the  purpose  of  examination  and 
investigation.  The  Board  may  also  hold  such  public  hearings 
as  in  its  judgment  shall  be  deemed  advantageous  for  the  pur- 
poses of  preparing  said  estimates.  When  said  estimates  have 
been  prepared  they  shall  be  transmitted  to  the  legislative  as- 
sembly not  later  than  the  opening  day  of  the  session  thereof, 
together  with  such  recommendations,  reasons  and  explana- 
tions with  regard  to  said  estimates  as  shall  be  deemed  neces- 

126 


BUDGETARY  LEGISLATION 

sary  by  the  Budget  Board.  The  Budget  Board  shall,  at  the 
same  time,  transmit  to  the  legislative  assembly  all  statements, 
estimates  and  requests,  or  copies  thereof,  which  were  filed 
with  the  State  Auditor  by  officers,  boards  and  commissions  as 
required  by  section  3  of  this  Act.. 

Sec.  5.  In  making  up  the  estimates  to  be  transmitted  to 
the  legislative  assembly  the  Budget  Board  shall,  in  connec- 
tion therewith  and  as  a  part  thereof,  make  an  estimate  of 
all  moneys  required  to  be  raised  or  appropriated  for  the 
payment  of  interest  upon  the  funded  debt  of  the  state  and 
its  other  obligations  bearing  interest,  and  shall  also  make  an 
estimate  of  the  sum  of  money  required  to  be  contributed  in 
the  two  next  ensuing  fiscal  years  to  the  general  sinking  funds 
maintained  for  the  redemption  and  payment  of  the  debts  of 
the  state,  and  it  shall  be  the  duty  of  the  State  Auditor  to 
furnish  the  Budget  Board  with  a  detailed  statement  of  the 
moneys  necessary  for  such  purposes. 

Sec.  6.  In  connection  with  and  as  a  part  of  the  esti- 
mate transmitted  by  the  Budget  Board  to  the  legislative  as- 
sembly the  said  Board  shall  transmit  an  estimate  of  the  rev- 
enues of  the  state  expected  to  be  received  during  the  two 
next  ensuing  years  and  may  make  such  recommendation  with 
regard  to  the  disposition  of  said  revenue  as  it  shall  deem  ad- 
visable and  necessary  to  promote  the  welfare  of  the  state.  The 
Budget  Board  shall  also  transmit  to  the  legislative  assembly 
as  a  part  of  said  estimate,  the  amounts  of  all  unexpended 
balances  under  appropriations  theretofore  made  by  law,  and 
may  make  such  recommendations  to  the  legislative  assembly 
relative  to  the  disposition  of  said  unexpended  balances  as  it 
deems  appropriate. 

Sec.  7.  There  is  hereby  appropriated  out  of  any  moneys  in 
the  State  Treasury,  not  otherwise  appropriated,  the  sum  of 
$2,000.00,  or  so  much  thereof  as  may  be  required,  to  carry 
out  the  purposes  of  this  Act. 


CHAPTER  VII 

BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL 
STATES :  CONNECTICUT,  LOUISIANA,  MASSA- 
CHUSETTS, OREGON,  WASHINGTON 

-  Connecticut.  In  1915,  Connecticut  passed  an  act  provid- 
ing for  the  creation  of  a  State  Board  of  Finance  and  a  Joint 
Standing  Committee  on  Appropriations  of  the  two  houses 
which  represents  a  recognition  of  the  desirability  of  centraliz- 
ing responsibility  for  the  preparation  and  consideration  of 
estimates,  though  it  cannot  be  said  to  constitute  much  of  a  step 
towards  the  introduction  of  a  correct  budgetary  system. 

The  State  Board  of  Finance  is  made  to  consist  of  the  state 
treasurer,  state  comptroller,  and  state  tax  commissioner  and 
three  electors  appointed  by  the  Governor  for  different  terms 
of  years.  All  government  departments  and  institutions  are 
required  to  submit  their  estimates  of  expenditures  to  this  body 
and  the  latter  is  directed  to  compile  them  for  publication  by 
the  comptroller.  It  is  provided  that  the  board  "may  hold 
hearings  upon  such  estimates  as  it  desires  and  submit  its 
recommendations  regarding  them." 

It  is  hardly  necessary  to  point  out  how  far  this  arrange- 
ment falls  short  of  bringing  into  existence  any  proper  bud- 
getary organ  or  of  giving  to  it  the  status  such  an  organ  should 
have.  The  fact  that  the  three  appointed  members  receive  a 
salary  of  only  $500  per  annum  would  indicate  that  they  will 
give  their  services  during  only  a  part  of  the  year.  The  further 
fact  that  they  have  no  responsibility  for  the  conduct  of  govern- 
ment affairs  destroys  in  great  part  the  value  of  their  opinions 
or  recommendations.  The  elimination  of  the  Governor  from 
S  all  participation  in  the  framing  of  the  estimates  to  be  sub- 

128 


BUDGETARY  LEGISLATION 

mitted  to  the  legislature  is  wholly  bad.  It  is  hardly  conceiv- 
able that  the  legislature  will  give  much  weight  to  the  recom- 
mendations of  this  body.  The  only  service  that  it  is  likely 
to  render  is  that  of  compiling  the  estimates,  and  that  could  be 
better  done  by  the  comptroller  or  some  other  officer. 

The  provision  for  a  Joint  Standing  Committee  on  Appro- 
priations is  a  step  in  the  right  direction,  though  the  provision 
that  the  reference  of  bills  covering  an  appropriation  to  this 
committee  may  be  dispensed  with  by  a  two-thirds  vote  of  both 
houses  weakens  its  effectiveness. 

The  further  provision  that  the  Joint  Standing  Committee 
on  Appropriations  and  the  State  Board  of  Finance  shall  hold 
joint  meetings  for  the  holding  of  hearings  and  the  taking  of 
action  on  appropriation  bills  raises  some  interesting  questions. 
As  the  provision  stands  it  authorizes,  not  only  officers  of  the 
administrative  branch  of  the  government,  but  electors  specially 
appointed  by  the  Governor  to  participate  actively  in  the  con- 
duct of  legislative  affairs.  Just  how  this  will  work  out  it  is 
difficult  to  say. 

The  main  good  accomplished  by  the  passage  of  this  act  is 
that  it  raises  the  question  of  budgetary  reform  and  may  lead 
to  more  effective  action.  Following  is  a  copy  of  this  act : 

An  Act  creating  a  State  Board  of  Finance  and  defining  its 
duties.  Approved  May  19,  1915.  (Acts  of  1915,  ch.  302.) 
Amended  by  Act  approved  April  19,  1917.  (Acts  of  1917, 
ch.  171.) 

Section  i.  On  or  before  the  second  Wednesday  after  the 
first  Monday  of  January,  1916,  the  governor  shall  appoint 
three  electors  who  shall  hold  office,  one  for  one  year,  one  for 
three  years,  and  one  for  five  years  from  said  day  and  until 
their  successors  are  appointed  and  qualified,  who,  with  the 
treasurer,  the  comptroller,  and  the  tax  commissioner,  ex- 
officio,  shall  constitute  a  state  board  of  finance.  On  or  before 
the  second  Wednesday  after  the  first  Monday  of  January, 
1917,  and  biennially  thereafter,  the  governor  shall  appoint  one 
elector  a  member  of  said  board  who  shall  hold  office  for  six 
years  and  until  his  successor  is  appointed  and  qualified.  Any 

129 


BUDGETARY  REFORM  IN  THE  STATES 

vacancy  occurring  among  such  appointive  members  of  said 
board  shall  be  rilled  by  the  governor  for  the  unexpired  term. 
Each  appointive  member  shall  be  sworn  to  a  faithful  discharge 
of  his  duties. 

Sec.  2.  The  comptroller  shall  provide  suitable  rooms  and 
accommodations  in  the  capitol  for  said  board,  which  may  in- 
cur necessary  expenses  for  clerical  assistance,  printing,  sta- 
tionery, and  other  incidental  expenses.  The  members  of  said 
board  appointed  by  the  governor  shall  receive  a  salary  of 
five  hundred  dollars  per  annum  and  their  necessary  traveling 
expenses. 

Sec.  3.  (As  amended  by  Act  approved  April  19,  1917.) 
The  several  departments,  boards,  commissions,  and  institu- 
tions supported  by  the  state  or  receiving  state  aid  shall,  on  or 
before  the  fifteenth  day  of  October,  1916,  and  biennially  there-, 
after,  submit  to  said  board  itemized  estimates  of  their  re- 
spective expenses,  salaries  and  disbursements  for  the  two 
fiscal  years  next  ensuing  requiring  appropriations  therefor. 
The  state  board  of  finance  is  authorized  to  compile  the  esti- 
mates so  made  for  publication,  and  the  comptroller  shall  cause 
to  be  printed  such  number  of  said  book  of  estimates  as  the 
board  of  control  shall  decide.  Said  board  of  finance  may 
hold  hearings  upon  any  such  estimates  and  shall  tabulate  and 
report  the  same,  with  its  recommendations  thereon,  if  any, 
to  the  next  session  of  the  general  assembly,  not  later  than 
the  second  week  thereof. 

Sec.  4.  At  each  regular  session  of  the  general  assembly 
there  shall  be  a  joint  standing  committee  on  appropriations, 
consisting  of  two  senators  and  five  representatives,  who  shall 
be  appointed  in  accordance  with  the  provisions  of  the  joint 
rules  adopted  at  such  session.  All  bills  and  joint  resolutions 
making  appropriations,  including  bills  or  joint  resolutions  car- 
rying or  requiring  appropriations  and  favorably  reported  by 
any  other  committee  of  the  general  assembly,  shall,  before 
passage,  be  referred  to  said  committee,  unless  such  reference 
shall  be  dispensed  with  by  vote  of  at  least  two-thirds  of  each 
branch  of  the  general  assembly.  During  the  sessions  of  the 
general  assembly  said  board  of  finance  and  said  committee 
on  appropriations  shall  hold  joint  meetings  and  shall  organize 
by  the  selection  of  a  chairman  and  a  clerk  and  shall  hear  the 
several  bills  and  joint  resolutions  referred  to  said  committee 
on  appropriations.  Said  board  and  said  committee  shall,  with- 

130 


BUDGETARY  LEGISLATION 

in  two  weeks  after  the  conclusion  of  any  hearing  upon  any 
bill  or  joint  resolution  referred  to  said  committee,  act  upon 
the  same,  and  if  such  action  be  favorable  shall  report  such 
bill  or  joint  resolution  to  the  house  in  which  it  originated. 
Said  board  of  finance  and  said  committee  may  originate  and 
report  any  bill  or  joint  resolution  which  they  may  deem  nec- 
essary. 

Sec.  6.     This  act  shall  take  effect  July  i,  1915. 

Louisiana.  On  July  5,  1916,  Louisiana  passed  an  act  '* 
providing  for  the  creation  of  a  body  to  be  known  as  the  Board 
of  State  Affairs.  Though  this  board  was  created  in  the  first 
instance  to  take  over  the  duties  of  the  State  Board  of  Ap- 
praisers and  the  State  Board  of  Equalization,  which  were 
abolished,  it  had  conferred  upon  it  new  powers  which,  in 
effect,  made  of  it  an  official  economy  and  efficiency  board  with 
the  duty  of  investigating  and  submitting  recommendations 
regarding  the  organization  and  administration  of  all  govern- 
ment departments  and  institutions,  and  also  a  budgetary  organ 
with  the  duty  of  preparing  the  budget  of  revenues  and  ex- 
penditures for  consideration  by  the  legislature.  These  two 
functions  are  closely  related  and  properly  should  be  in  the 
same  hands.  This  is  a  true  budgetary  organ  in  that  it  has 
power  to  investigate  the  organization,  methods,  and  work 
of  all  state  services  and  not  only  compiles  the  estimates  but 
submits  its  opinion  regarding  what  appropriations  are  needed. 
It  makes  its  report  direct  to  the  legislature  and  not  to  the 
Governor.  The  only  participation  granted  to  the  latter  in 
framing  a  financial  and  work  program  is  that  he  may,  if  he 
desires,  have  included  in  the  budgetary  statement  an  expres- 
sion of  his  opinion  regarding  the  funds  that  should  be  granted. 

We  have  had  occasion,  in  considering  the  laws  of  other 
states,  repeatedly  to  point  out  that,  in  our  opinion,  this  ar- 
rangement is  a  mistake.  On  the  face  of  it  this  act  means  that 
the  three  persons  constituting  the  board,  and  who  have  no 
direct  administrative  authority  over  the  spending  departments, 
are  given  the  duty  of  recommending  the  action  that  should 


BUDGETARY  REFORM  IN  THE  STATES 

be  taken  in  reference  to  their  support.  This  means  a  weaken- 
ing of  the  responsibility  of  the  Governor  when  the  require- 
ments of  the  situation  are  that  his  authority  and  responsi- 
bility should  be  strengthened. 

It  is  also  a  question  whether  an  organ  of  this  character 
performing  an  important  function  in  relation  to  the  govern- 
ment as  a  whole  should  be  given  the  specific  duties  in  respect 
to  the  assessment  of  property  and  taxation  that  have  been 
conferred  upon  it.  As  we  are  not  here  concerned  with  these 
powers  and  duties  of  the  board  the  sections  relating  thereto  are 
omitted  from  the  reproduction  of  the  act  that  follows : 

An  Act  to  create  a  Board  of  State  Affairs;  to  prescribe  its 
powers,  duties  and  compensation;  etc.  Approved,  July  5, 
1916.  (Acts  of  1916,  No.  140.) 

Section  i.  There  is  hereby  created  a  State  Board  to  be 
known  as  the  "Board  of  State  Affairs,"  which  said  Board  shall 
succeed  to  the  powers  and  duties  of  the  State  Board  of  Ap- 
praisers and  the  State  Board  of  Equalization,  so  far  as  the 
same  may  not  be  inconsistent  with  the  provisions  of  this  Act 
and  the  powers  and  duties  herein  prescribed ;  and,  accordingly, 
the  said  State  Board  of  Appraisers  and  State  Board  of  Equali- 
zation are  hereby  abolished.  All  of  the  property,  reports,  rec- 
ords and  memoranda,  materials  and  supplies,  belonging  to  said 
Board  shall  be  transferred  to  the  Board  herein  created. 

Sec.  2.  The  said  Board  shall  be  composed  of  three  mem- 
bers, who  shall  be  appointed  by  the  Governor,  by  and  with 
the  advice  and  consent  of  the  Senate.  They  shall  be  ap- 
pointed so  as  to  enter  upon  their  duties  on  January  ist,  1917, 
or  as  soon  thereafter  as  possible.  They  shall  serve  for  a 
term  of  two,  four,  and  six  years,  as  designated  by  the  Gov- 
ernor. The  term  of  their  successors  shall  be  six  years,  unless 
sooner  removed  by  the  Governor  for  cause,  with  the  concur- 
rence of  the  Senate,  but  such  terms  shall  expire  at  the  be- 
ginning of  the  following  terms  regardless  of  the  date  of  com- 
mission or  taking  the  oath.  In  case  of  a  vacancy,  it  shall 
be  filled  by  appointment  by  the  Governor  for  the  unexpired 
portion  of  the  term,  subject  to  confirmation  of  the  Senate. 

Sec.  3.  No  person  appointed  as  a  member  of  said  Board 
shall  be  under  any  employment,  outside  of  his  duties  as  a 

132 


BUDGETARY  LEGISLATION 

member  of  the  Board,  for  which  he  shall  draw  any  remunera- 
tion; and  he  shall  indicate  in  the  records  of  the  Board  from 
what  class  of  property  or  investment  he  may  derive  income, 
but  not  the  amount  thereof.  No  employee  of  the  Board 
shall  have  other  employment,  or  draw  or  take  any  salary,  wage, 
commission,  gift,  gratuity,  or  emolument,  for  any  accommoda- 
tion or  service  rendered  to  another  than  the  Board,  unless 
the  nature  of  such  accommodation,  service  or  employment  and 
the  remuneration  therefor  shall  be  first  known  and  approved 
by  the  said  Board.  The  violation  of  this  provision  shall  be 
a  misdemeanor,  and,  upon  conviction,  it  shall  be  punishable 
by  a  fine  not  exceeding  five  hundred  dollars  ($500.00),  or 
imprisonment  in  jail  not  exceeding  thirty  (30)  days;  such 
violation  known  to  the  Board,  or  any  member  thereof,  shall 
without  discretion,  be  reported  to  the  proper  prosecuting  offi- 
cer; the  failure  so  to  do  to  be  deemed  a  neglect  of  duty. 
This  provision  shall  be  read  by  the  Board  in  session  to  each 
and  every  employee.  Each  member  shall  devote  his  entire 
time  to  the  duties  of  his  office,  and  shall  engage  in  no  occupa- 
tion or  business  interfering,  or  inconsistent,  with  his  duties. 

Sec.  4.  Each  member  shall  take  the  oath  of  office  and  fur- 
nish a  solvent  bond,  for  the  faithful  performance  of  his  du- 
ties, according  to  law,  in  the  sum  of  ten  thousand  dollars 
($10,000.00),  to  be  paid  for  by  the  Board,  within  thirty  days 
after  his  appointment.  Each  member  shall  receive  an  annual 
salary  of  Five  Thousand  Dollars  ($5,000.00),  to  be  drawn 
monthly  upon  his  own  warrant. 

Sec.  5.  The  domicile  of  the  Board  shall  be  at  the  State 
Capital,  and  immediately  after  the  appointment  of  the  mem- 
bers, as  herein  provided,  the  Governor  shall  designate  the 
Chairman  and  they  shall  organize.  A  majority  of  the  Board 
shall  constitute  a  quorum  for  the  transaction  of  business  and 
the  performance  of  its  duties.  The  said  Board  shall  be  open 
for  the  transaction  of  business  every  day,  Sundays  and  legal 
holidays  excepted.  The  Board  may  hold  sessions  or  conduct 
investigations  at  any  place  other  than  the  capital,  when  it  is 
deemed  necessary  to  facilitate  the  performance  of  its  duties; 
and  any  member  may  be  designated  by  the  Board  to  hold  hear- 
ings or  conduct  investigations,  either  at  the  Capital  or  at  any 
other  place,  and  report  the  result  thereof  to  the  Board  for 
action.  Likewise,  the  said  Board  may  name  and  appoint,  in 
any  instance  where  the  same  may  appear  to  further  the  ob- 

133 


BUDGETARY  REFORM  IN  THE  STATES 

jects  of  this  act,  some  person  to  make  investigations  and  hold 
public  hearings,  with  the  same  authority  that  the  Board,  or 
any  member  thereof,  would  have,  the  result  of  such  investi- 
gations and  hearings  to  be  referred  to  the  Board  as  it  may 
require.  Where  such  person  is  designated,  as  herein  set  forth, 
he  shall  have  a  written  order  to  that  effect  from  the  Board, 
instructing  him  in  the  objects  desired  to  be  accomplished  by 
such  investigations  or  hearings.  Such  order  shall  be  full  au- 
thority for  the  said  person  so  designated,  to  do  all  acts  that 
any  member  of  the  Board  would  have  authority  to  do,  in  the 
matter  of  making  such  investigations  or  holding  such  hear- 
ings; all  orders,  notices,  and  the  like  issuing  in  such  case  by 
said  designated  person,  shall  be  in  the  name  of  the  Board,  by 
said  person. 

Sec.  6.  The  Board  may  appoint  a  secretary  at  a  salary  of 
Twenty-five  Hundred  Dollars  ($2,500.00)  a  year,  who  shall 
take  the  oath  of  office  and  furnish  bond  for  the  faithful  per- 
formance of  his  duties,  according  to  law,  at  the  expense  of  the 
Board,  in  the  sum  of  Ten  Thousand  Dollars  ($10,000.00). 
The  Board  may  employ  all  necessary  clerks,  inspectors,  in- 
vestigators, or  other  experts  and  employees  necessary  to  per- 
form the  duties  required  of  it  under  this  act,  and  may  fix  the 
remuneration  of  such  persons.  That  in  addition  to  the  sal- 
aries of  the  members  of  the  Board,  and  the  Secretary,  the 
General  Assembly  shall  appropriate  the  sum  of  Twenty-five 
Thousand  Dollars  for  the  use  of  said  Board  in  the  year  1917; 
and  Fifteen  Thousand  Dollars  for  the  use  of  said  Board  to 
August  ist,  1918,  out  of  which  said  sums,  or  so  much  there- 
of as  may  be  necessary,  it  shall  pay  all  of  the  said  help,  ex- 
penses of  its  office,  and  all  actual  traveling  expenses  of  the 
Board,  any  member,  or  of  its  assistants,  such  salaries  and 
expenses  to  be  paid  upon  the  order  of  the  Board. 

Sec.  7.     (Relates  to  assessment  and  taxation  of  property.) 

Sec.  8.  It  shall  be  the  duty  of  the  Board,  and  it  shall  have 
the  power  and  authority : 

(i)  To  require  every  department  of  the  State  and  every 
public  institution,  the  conduct  or  operation  of  which  involves 
the  receipt,  expenditure  or  handling  of  any  State  funds,  or 
property,  to  submit  to  the  Board,  at  least  ninety  (90)  days 
before  the  meeting  of  the  General  Assembly,  an  estimate  of 
its  revenues  and  expenditures  for  each  fiscal  year  of  the  en- 
suing biennial  period. 

134 


BUDGETARY  LEGISLATION 

(2)  To  distribute  not  later  than  January  ist  of  each  year 
in  which  the  General  Assembly  may  regularly  meet  to  each 
department  or  institution  aforesaid  the  proper  blanks  neces- 
sary for  the  preparation  of  the  budget  estimates,  which  shall 
show  their  actual  revenues  and  expenses  for  two  prior  fiscal 
years,  and  shall  show  in  corresponding  detail  their  estimated 
revenues  and  expenses  for  the  ensuing  biennial  period,  and 
shall  further  show  whether  and  in  what  amounts  the  estimates 
are  larger  or  smaller  than  the  corresponding  items  of  expendi- 
tures for  the  previous  biennial  period ;  to  require  not  later  than 
February  ist  in  such  year  that  such  department  or  institution, 
hereinafter  referred  to  as  public  body,  shall  return  to  the 
Board  its  estimate  for  the  succeeding  biennial  period  with  full 
explanation  of  reasons  for  changes  above  or  below  the  corre- 
sponding items  for  the  previous  similar  period.  The  estimates 
from  all  public  bodies  shall  be  immediately  compiled  under  the 
direction  of  the  Board,  and  reviewed  by  means  of  such  field 
examinations,  interviews  or  correspondence  as  may  be  neces- 
sary to  secure  full  information.  The  result  of  these  exam- 
inations together  with  the  estimates  and  departmental  ex- 
planations shall,  not  later  than  March  I5th  of  each  year,  be 
considered  by  the  Board,  which  shall  not  divide  into  Commit- 
tee for  such  review.  Not  later  than  April  ist,  the  Board  shall 
recommend  to  the  Legislature  a  budget  which  in  addition  to 
giving  comparisons  of  estimates  for  the  succeeding  biennial 
period  with  the  preceding  biennial  period,  shall  also  give  the 
amounts  which  the  Board  recommends  item  for  item,  with 
columns  showing  whether  the  recommended  allowances  are 
equal  to,  above  or  below  the  amounts  requested,  and  whether 
they  are  equal  to,  above  or  below  the  amounts  of  the  preceding 
biennial  period  which  explanatory  notes  will  show  the  Board's 
reasons  for  recommending  the  allowances  and  disallowances. 
Such  budget  shall  be  printed  with  the  recommendations  and 
reasons  for  recommendations,  and  the  record  of  the  vote  upon 
such  recommendations,  where  such  vote  is  not  unanimous.  The 
report  shall  include  any  recommendations  which  a  minority  or 
the  Governor  or  Governor-elect,  may  wish  to  have  included 
in  the  report,  and  such  reports  shall  be  distributed  not  later 
than  April  25th  to  the  members  of  the  Legislature  and  the 
public  bodies  interested. 

Sec.  9.  It  shall  be  the  duty  of  the  Board,  and  it  shall  have 
the  power  and  authority,  between  January  ist,  1917,  and  the 

'35 


BUDGETARY  REFORM  IN  THE  STATES 

convening  of  the  General  Assembly  of  1918:  (i)  To  inves- 
tigate duplication  of  work  of  public  bodies,  the  efficiency  of 
the  organization  and  administration  of  such  public  bodies  and 
to  formulate  and  recommend  to  the  General  Assembly  plans 
for  the  greater  coordination  of  such  public  bodies  and  the  im- 
provement of  State  administration  in  general. 

(2)  To  investigate  the  feasibility  of  a  central  Board  of 
Control  for  all  public  educational  institutions,  the  same  for  all 
public  charitable  and  eleemosynary  institutions;  with  partic- 
ular respect  to  the  business  administration  of  such  institu- 
tions. 

(3)  To    investigate    the    efficiency    and    cost    of    State 
printing. 

(4)  To  investigate  and  report  upon  the  feasibility  of  es- 
tablishing a  central  purchasing,  sales  and  exchange  bureau, 
under  the  control  and  direction  of  this  Board,  for  the  purpose 
of  purchasing  all  supplies  and  materials  for  and  selling  or  ex- 
changing all  the  products  of,  such  public  bodies. 

(5)  To  investigate  other  matters  for  the  purpose  of  bring- 
ing about  greater  efficiency  and  economy  in  every  public  body 
advancing  the  economic  betterment  of  the  State,  and  of  pro- 
moting the  public  welfare. 

The  results  of  the  investigations  herein  required  shall  be 
printed  and  placed  in  the  hands  of  the  members  of  the  General 
Assembly  and  the  heads  of  all  public  departments  and  public 
institutions  at  least  sixty  (60)  days  before  the  meeting  of  said 
General  Assembly  in  1918;  and,  at  the  discretion  of  the  Board, 
such  reports  shall  be  biennially  made  thereafter. 

Sec.  10.  (Relates  to  assessment  of  taxable  property.) 
Sec.  ii.  The  Board  shall  have  authority  in  the  perform- 
ance of  any  duty,  or  exercise  of  any  power,  provided  in  this 
Act,  to  send  for  persons,  books  and  papers;  to  examine  rec- 
ords, and  to  summons  and  compel  the  attendance  of  witnesses 
and  to  place  the  same  under  oath  and  to  examine  them;  to 
issue  subpoenas  and  subpoenas  duces  tecum,  if  necessary;  and 
to  compel  the  production  of  records,  books  and  papers,  and 
other  information  which  the  said  Board  may  deem  necessary; 
to  require  the  sheriffs  of  the  various  parishes  to  serve  such 
subpoenas  and  other  processes  of  said  Board  and  execute  its 
orders,  and  to  receive  therefor  the  same  compensation  as  may 
be  provided  by  law  for  similar  services  under  processes  issued 
by  the  District  Court,  the  costs  and  expenses  of  such  pro- 

136 


BUDGETARY  LEGISLATION 

ceedings  to  be  paid  by  the  Board;  provided  that  in  any  case 
where  it  shall  be  answered  that  such  books,  papers,  documents, 
or  other  information  is  not  within  the  State,  and  they  are  not 
brought  within  the  State  to  answer  the  demand  of  the  Board, 
then  the  Board  shall  proceed  by  way  of  injunction,  or  other 
appropriate  legal  proceeding,  to  compel  the  offending  delin- 
quent to  cease  doing  business  in  the  State  until  said  books, 
papers,  documents,  or  what  the  Board  shall  deem  an  equiva- 
lent, shall  be  produced,  and  the  granting  of  such  injunction 
or  other  relief  shall  be  the  penalty  for  refusing  to  comply 
with  said  demand;  and  such  proceedings  shall  be  brought  at 
the  domicile  of  the  Board. 

Sec.  12.  Any  person,  or  persons,  who  shall  disobey  any 
order  of  said  Board,  issued  under  the  authority  of  the  preced- 
ing section,  or  who  shall  disobey  any  subpoena  duces  tecum, 
or  refuse  to  testify  when  requested  to  do  so  by  said  Board, 
either  orally  or  by  commission,  shall  be  deemed  guilty  of  a 
misdemeanor,  and  upon  conviction  thereof,  shall  for  each  of- 
fense be  fined  in  a  sum  not  less  than  fifty  dollars,  nor  more 
than  one  hundred  dollars,  or  be  confined  in  jail  for  not  ex- 
ceeding thirty  days,  or  both,  at  the  discretion  of  the  Court. 
Sees.  13  to  1 6.  (Relate  to  assessment  of  taxable  property.) 
Sec.  17.  All  laws  and  parts  of  laws  inconsistent  with  or 
in  conflict  with  this  Act  are  hereby  repealed ;  and  this  Act  shall 
only  take  effect  in  case  the  amendment  to  Articles  225  and 
226  proposed  at  this  session  in  Act  No.  168  shall  be  adopted 
in  November,  1916. 

Massachusetts.  The  subject  of  budgetary  reform  in 
Massachusetts  is  one  of  special  interest  at  the  present  time 
due  to  the  fact  that  a  constitutional  convention  is  now  in 
session  for  the  revision  of  the  constitution  of  that  state,  and 
it  is  certain  that  this  subject  will  receive  careful  attention  by 
that  body.  The  way  for  such  action  has  been  prepared  by 
the  establishment  in  1912  of  a  Commission  on  Economy  and  *** 
Efficiency,  having  among  its  specified  duties  that  of  reporting 
upon  the  introduction  of  a  budget.  Before  considering  the 
work  of  this  body  and  its  successor,  the  office  of  Supervisor 
of  Administration,  it  is  desirable  to  state  briefly  conditions 
in  respect  to  the  framing  of  estimates  and  the  enactment  of 
appropriation  acts  as  they  existed  prior  to  the  establishment 
of  these  bodies. 

137 


BUDGETARY  REFORM  IN  THE  STATES 

For  many  years  there  had  been  on  the  statute  books  an 
act  requiring  the  submission  of  estimates  to  the  auditor  for 
tabulation  and  presentation  to  the  legislature.  This  act  ac- 
complished little,  however,  in  the  way  of  getting  before  the 
legislature  a  consolidated  statement  of  expenditure  requests, 
since  large  sums  were  expended  in  virtue  of  general  laws  and 
not  in  pursuance  of  appropriation  acts,  and  the  practice  ob- 
tained of  many  special  requests  for  appropriations  being  trans- 
mitted directly  to  the  legislature  which  did  not,  therefore,  find 
a  place  in  the  auditor's  statements.  Regarding  the  first  point 
the  Commission  on  Economy  and  Efficiency  in  its  special  re- 
port on  Budget  Procedure  said  i1 

In  a  report  on  the  administration  of  state  revenues  and 
loans  submitted  to  the  Governor  and  Legislature  on  April  29, 
1916,  this  Commission  discussed  the  scope  of  the  budget  and 
called  attention  to  the  large  amount  of  State  revenue  now  ex- 
pended without  being  appropriated,  $2,174,162  being  so  ex- 
pended in  1910  by  departments  and  institutions,  while  large 
sums  of  unappropriated  revenues  were  also  used  for  meeting 
interest  and  debt  charges.  As  stated  in  that  report  "so  long 
as  large  amounts  of  revenue  are  expended  without  appropri- 
ation, as  at  present,  no  genuine  budget  procedure  can  be  put 
in  force.  When  all  expenditures  for  State  activities  are  brought 
within  the  scope  of  appropriation  acts  the  first  step  towards 
budget  reform  will  be  taken." 


In  respect  to  the  second  point  the  secretary  of  the  Com- 
mission on  Economy  and  Efficiency  in  a  paper  descriptive  of 
budgetary  conditions  in  the  state  said  :2 

In  addition  to  the  estimates  submitted  to  and  tabulated  by 
the  auditor,  large  appropriations  are  requested  by  petitions 
submitted  directly  to  the  legislature.  In  the  session  of  1915, 
approximately  200  petitions  requesting  over  $2,500,000  in  ap- 

1  Report  on  Budget  Procedure,  Commission  on  Economy  and  Effi- 
ciency, May  27,  1916,  p.  5. 

'Ernest  H.  Maling:  Financial  Administration  of  the  Common- 
wealth of  Massachusetts.  Annals  of  the  American  Academy  of 
Political  and  Social  Science,  November,  1915,  p.  107. 

138 


BUDGETARY  LEGISLATION 

propriations  to  be  met  from  revenue  were  submitted  directly 
to  the  legislature  and  thus  omitted  from  the  auditor's  tabu- 
lation. Of  this  amount,  only  a  negligible  sum  represented  re- 
quests which  could  not  have  been  submitted  in  time  for  tabu- 
lation by  the  auditor. 

An  attempt  to  improve  the  budgetary  situation  was  made 
in  1910  through  the  passage  of  an  act  which  required  the 
auditor  to  submit  his  tabulation  of  estimates  to  the  Governor 
and  directed  the  latter  to  "transmit  the  same  to  the  General 
Court  with  such  recommendations,  if  any,  as  he  may  deem 
proper."  x  Though  this  act  apparently  sought  to  introduce  the 
correct  principle  of  having  the  Governor  submit  a  budget, 
it  did  not  work  out  that  way.  The  reasons  why  it  did  not 
are  thus  described  by  the  secretary  to  the  Commission  on 
Economy  and  Efficiency  in  the  paper  already  quoted  from.2 

The  purpose  of  the  act  of  1910  was  to  place  the  responsi- 
bility for  a  budget  upon  the  Governor.  It  was  claimed  by 
proponents  of  the  law  that  under  its  provisions  the  Governor 
"must  exercise  control  and  be  responsible  for  increase  in  ex- 
penditures and  in  the  debt  as  well."  The  law  became  fully 
operative  in  1911,  and  it  soon  became  evident  that  the  Gov- 
ernor and  Council  had  neither  the  authority  nor  the  facilities 
for  investigating  the  administration  of  the  departments  in 
order  to  determine  the  reasonableness  of  the  estimates.  The 
law  contemplated  that  the  Auditor's  Office  would  furnish  such 
data  as  might  be  needed,  but  no  increase  in  the  personnel  of 
that  office  was  authorized.  The  Auditor  furnished  data  rela- 
tive to  receipts  and  payments,  but  had  no  means  for  assisting 
the  Governor  in  determining  whether  the  departments  were  in 
genuine  need  of  the  amounts  contained  in  the  estimates.  At 
the  request  of  the  Governor  the  legislature  authorized  him  to 
investigate  the  departments  and  for  this  purpose  public  ac- 
countants, engineers  and  other  investigators  were  temporarily 
engaged.  On  the  basis  of  the  reports  of  his  investigators,  the 
Governor  submitted  from  time  to  time  throughout  the  legis- 
lative session,  recommendations  in  practically  all  of  the  esti- 

*Acts  of  1910,  Chapter  220. 
"Haling,  op.  cit.,  p.  102. 

139 


BUDGETARY  REFORM  IN  THE  STATES 

mates.  Material  reductions  in  the  estimates  of  some  depart- 
ments were  recommended  by  the  Governor,  but  the  legislature 
was  influenced  to  only  a  small  degree  by  the  Governor's  mes- 
sages and  proceeded  with  its  appropriation  bills  in  much  the 
same  manner  as  formerly. 

Although  the  law  did  not  prove  satisfactory,  it  cannot  be  re- 
garded as  a  failure  of  the  principle  of  an  executive  budget. 
The  intent  of  the  law  was  to  place  responsibility  for  the  esti- 
mates upon  the  Governor,  but  the  legislature  in  fact  never  re- 
linquished its  prerogatives  and  did  not  give  the  Governor  ade- 
quate means  for  investigation  and  preparation  of  a  budget. 

The  failure  of  this  act  is  exceedingly  informative  since  it 
demonstrates  the  point  insisted  upon  in  this  volume  that  a 
budgetary  system  cannot  be  established  by  the  mere  pro- 
vision that  a  budget  shall  be  prepared  and  submitted  by  the 
chief  executive.  With  it  must  go  many  other  things :  the 
requirement  of  a  system  of  accounting  and  reporting  that  will 
develop  the  information  needed  for  budgetary  purposes,  the 
provision  of  an  organ  with  adequate  powers  to  have  charge 
of  the  preparation  of  that  document,  and  the  vesting  in  the 
hands  of  the  chief  executive  of  adequate  authority  over  all 
the  administrative  services  of  the  government.  As  regards 
the  last  point  the  author  just  quoted  was  thus  quite  justified 
in  continuing : 

Moreover,  it  is  extremely  doubtful  if  a  genuine  executive 
budget  procedure  can  be  adopted  so  long  as  the  state  govern- 
ment remains  in  its  present  status  of  decentralization  with 
over  100  distinct  units  of  organization  controlled  by  some  335 
officials  and  members  of  boards. 

To  correct  these  defects  in  part  the  legislature  in  1912  re- 
pealed the  act  of  1910  and  passed  an  act  providing  for  the 
creation  of  a  permanent  body  to  be  known  as  the  Commission 
on  Economy  and  Efficiency.1  The  commission  thus  established 
was  of  a  somewhat  different  character  from  the  commissions 

1  An  act  to  establish  a  Commission  on  Economy  and  Efficiency 
for  this  Commonwealth,  Approved  June  6,  1912,  Acts  of  1912,  Chap- 
ter 719. 

140 


BUDGETARY  LEGISLATION 

similarly  designated  created  by  other  states,  in  that,  in  addi- 
tion to  being  given  the  general  duty  of  investigating  the 
organization  and  methods  of  business  of  the  administrative 
services  of  the  government,  it  was  made  an  operating  depart- 
ment with  specific  duties  in  reference  to  the  preparation  and 
submission  of  estimates.  It  thus  provided  that  the  auditor 
should  continue  to  make  his  compilation  of  the  estimates  of 
the  departments,  but  that,  in  addition  to  furnishing  the  Gover- 
nor with  a  copy  of  such  compilation,  it  should  also  furnish  to 
the  commission  a  copy  and  that  the  latter  body — 

shall  examine  the  statements  submitted  to  it  by  the  Auditor, 
showing  the  general  and  special  appropriations  asked  for  by 
those  in  charge  of  the  various  departments,  institutions,  boards 
and  undertakings  mentioned  in  sections  three  and  four,  and 
shall  report  thereon  to  the  General  Court  annually  on  or  before 
the  first  Thursday  in  January,  and  at  such  other  times  as  it 
may  see  fit,  together  with  such  facts,  suggestions  or  recom- 
mendations as  to  any  or  all  of  the  appropriations  requested  or 
the  method  of  raising  money  for  the  same  as  it  may  deem 
expedient. 

It  will  be  noted  that  by  the  foregoing  the  Commission  on 
Economy  and  Efficiency  was  directed  to  make  its  recom- 
mendations direct  to  the  legislature  and  not  to  the  Governor. 
Furthermore,  the  provision  of  law  directing  that  the  Governor 
should  make  recommendations  regarding  estimates  was  re- 
pealed. Though  the  act  thus  made  a  distinct  advance  in 
providing  for  a  budgetary  organ,  it  made  this  organ  an  agent 
of  the  legislature  rather  than  of  the  executive,  and  thus  was 
in  no  sense  a  movement  towards  an  executive  budget. 

That  the  legislature  was  not  of  the  opinion  that,  in  making 
provision  for  this  body,  it  had  solved  the  budgetary  problem, 
is  evident  from  the  fact  that  this  body  was  specifically  in- 
structed by  the  act  to  investigate  and  report  regarding  the 
steps  that  would  be  required  to  put  the  administration  of  the 
government  upon  a  budgetary  basis.  In  pursuance  of  this 
direction  the  commission  in  1916  submitted  a  brief  but  com- 

141 


BUDGETARY  REFORM  IN  THE  STATES 

prehensive  report  on  the  subject.1  In  this  report  the  commis- 
sion sets  forth  very  clearly  the  evils  of  existing  conditions 
and  then  enumerates  the  steps  that  must  be  taken  to  give  to 
the  state  a  budgetary  system.  Respecting  the  first  it  said : 

Massachusetts  procedure  does  not  remotely  resemble  a  bud- 
get system.  *  *  * 

No  complete  tabulation  of  estimates  and  requests  for  ap- 
propriations is  now  made. 

The  present  tabulations  (House  Documents  No.  i  and  No. 
2 )  are  necessarily  incomplete  because  of  the  many  requests  for 
appropriations  filed  directly  with  the  legislature. 

The  present  tabulations  contain  no  information  concerning 
requests  for  expenditures  to  be  met  from  loans  and  no  pro- 
vision is  made  for  compiling  such  requests. 

The  estimates  cannot  be  studied  in  the  aggregate  so  as  to 
consider  the  relative  importance  of  the  many  estimates,  neither 
can  they  be  considered  in  relation  to  the  available  revenue. 

The  estimates  for  any  individual  department  or  project  as 
given  in  House  Documents  No.  i  or  No.  2  cannot  be  consid- 
ered with  the  assurance  that  they  are  the  complete  or  total 
estimates  for  that  department  or  project. 

No  plan  for  financing  the  state  is  now  prepared  in  advance 
of  the  granting  of  appropriations  and  of  authorizing  loans. 

The  Governor  has  no  part  in  the  consideration  of  estimates, 
and  is  given  no  facilities  for  investigating  them  or  for  taking 
such  part  in  the  financing  of  the  Commonwealth  as  the  chief 
executive  should  take.  The  Governor's  action  is  now  negative, 
being  restricted  to  the  veto  of  appropriation  bills  which  are 
passed  from  time  to  time  throughout  the  whole  legislative  ses- 
sion. (136  £uch  bills  were  enacted  in  1915.) 

An  unnecessarily  large  number  of  appropriation  bills  is  now 
enacted,  with  the  result  that  the  time  of  the  legislature  is 
wasted.  Moreover,  difficulty  is  now  encountered  in  ascertain- 
ing from  the  statutes  the  total  amount  appropriated  for  the 
current  expenses  of  some  of  the  departments. 

The  present  method  of  enacting  appropriation  bills  is  un- 
systematic. 

1  Report  on  Budget  Procedure.  Submitted  to  the  Governor,  Coun- 
cil and  General  Court  by  the  Commission  on  Economy  and  Efficiency, 
May  27,  1916. 

142 


BUDGETARY  LEGISLATION 

In  drafting  appropriation  acts  little  or  no  consideration  has 
been  given  to  the  effect  which  the  form  of  the  act  may  have 
upon  departmental  administration.  As  a  result,  the  acts  for 
some  small  appropriations  now  contain  an  unnecessarily  large 
amount  of  detail,  while  some  large  appropriations  are  granted 
in  lump  sums. 

No  standards  for  the  drafting  of  appropriation  acts  have 
been  adopted,  with  the  result  that  items  for  a  single  depart- 
ment may  be  arranged  on  two  or  more  bases  which  are  in- 
consistent, thus  causing  confusion  as  to  the  amount  author- 
ized for  different  purposes  and  objects.1 

To  correct  the  evils  the  commission  recommended  that  the 
state  definitely  adopt  the  principle  of  an  executively  prepared 
budget,  and  submitted  with  its  report  the  draft  of  a  bill  to 
accomplish  this  purpose.  This  bill  provided  that  the  Com- 
mission on  Economy  and  Efficiency  should  become  an  agent  of 
the  Governor  instead  of  the  legislature  for  the  compiling  of 
the  estimates,  that  it  might  give  advice  to  the  Governor,  but 
that  responsibility  for  the  making  of  recommendations  to  the 
legislature  rested  squarely  upon  the  latter. 

It  will  be  noted  that  this  proposal  of  the  commission  only 
goes  so  far  as  to  provide  for  an  executively  formulated  budget. 
No  limitation  is  imposed  by  it  upon  the  power  of  the  legisla- 
ture to  modify  the  budgetary  proposals  thus  brought  before 
it.  This  the  commission  evidently  thought  was  a  matter  that 
could  wait  until  the  first  and  fundamental  step  had  been  taken, 

since  it  closed  its  report  with  the  following : 

» 

It  is  realized  that  from  the  standpoint  of  sound  theory  it 
would  be  desirable  to  recommend  further  changes,  but  in  the 
opinion  of  this  Commission  the  suggested  changes  are  as  far- 
reaching  as  should  be  made  at  one  time. 

On  June  i,  1916,  the  legislature  passed  an  act  abolishing 
the  commission  and  creating  in  its  place  the  Office  of  Super- 

*In  the  foregoing  quotation  the  matter  has  been  slightly  con- 
densed, chiefly  through  the  elimination  of  captions. 

143 


BUDGETARY  REFORM  IN  THE  STATES 

visor  of  Administration.1  This,  however,  made  little  change 
in  the  situation  since  practically  all  of  the  power  and  duties  of 
the  commission,  with  certain  other  powers,  were  transferred 
to  its  successor,  the  Supervisor  of  Administration. 

This  is  the  situation  as  it  exists  at  the  present  time,  with 
the  exception  that,  as  has  been  pointed  out,  a  convention  is 
now  in  session  for  the  revision  of  the  constitution  of  the  state, 
and  undoubtedly  will  give  serious  consideration  to  the  various 
phases  of  budgetary  reform,  the  integration  of  the  adminis- 
trative services,  the  requirement  of  a  proper  system  of  accounts 
and  reports,  the  formulation  of  a  budget  by  the  Governor  as 
recommended  by  the  Commission  on  Economy  and  Efficiency, 
and  the  powers  and  procedure  of  the  legislature  in  acting  upon 
such  proposal.  It  is  thus  a  matter  of  congratulation  that  this 
whole  question  should  have  received  so  careful  a  study  in  ad- 
vance of  the  assembling  of  the  convention.  Had  this  not 
taken  place,  it  would  have  been  much  more  difficult  to  get 
before  that  body  the  full  importance  of  the  considerations 
involved  and  the  lines  along  which  progress  lies.  Following 
is  a  copy  of  the  proposed  act. 

Draft  of  Proposed  Act  to  govern  the  Preparation  and  Review 
of  Estimates  for  Expenditures  and  Revenue. 

Section  i.  Every  officer  or  board  having  charge  of  any  de- 
partment, institution  or  undertaking  which  receives  an  annual 
appropriation  of  money  from  the  treasury  of  the  common- 
wealth, including  annual  appropriations  to  be  met  by  assess- 
ments, shall  annually  on  or  before  the  first  day  of  November, 
submit  to  the  commission  on  economy  and  efficiency  state- 
ments showing  in  detail  the  amounts  appropriated  for  the  cur- 
rent fiscal  year  and  estimates  of  the  amounts  required  for  the 
ensuing  fiscal  year,  with  an  explanation  for  any  increased  ap- 
propriation, and  with  citations  of  the  statutes  relating  thereto, 
together  with  such  other  information  as  may  be  required  by 

1  An  act  to  abolish  the  Commission  on  Economy  and  Efficiency  and 
the  State  Board  of  Publications  and  to  establish  the  Office  of  Super- 
visor of  Administration.  Approved  June  I,  1916.  Act  of  1916, 
Chapter  296. 

144 


BUDGETARY  LEGISLATION 

the  commission  on  economy  and  efficiency.  The  said  estimates 
shall  not  include  any  estimates  for  special  purposes  or  objects. 

Sec.  2.  Officers,  heads  of  departments,  boards,  commis- 
sions and  trustees  of  institutions,  who,  in  their  annual  reports, 
or  otherwise,  recommend  appropriations  from  the  state  treas- 
ury for  special  purposes  or  objects,  including  appropriations 
to  be  met  by  assessments,  in  addition  to  the  ordinary  running 
expenses,  shall  submit  estimates  thereof  in  detail  to  the  com- 
mission on  economy  and  efficiency  on  or  before  the  first  day 
of  November  of  each  year,  together  with  such  other  informa- 
tion as  may  be  required  by  the  commission  on  economy  and 
efficiency. 

Sec.  3.  Officers,  heads  of  departments,  boards,  commis- 
sions and  trustees  of  institutions,  who,  in  their  annual  reports 
or  otherwise,  recommend  the  issue  of  state  bonds  or  notes,  in- 
cluding those  to  be  met  by  assessments,  shall  submit  statements 
thereof  in  detail  to  the  commission  on  economy  and  efficiency 
on  or  before  the  first  day  of  November  of  each  year,  together 
with  such  other  information  as  may  be  required  by  said  com- 
mission. 

Sec.  4.  On  or  before  the  fifteenth  day  of  December  of  each 
year  the  auditor  of  the  commonwealth  shall  submit  to  the  com- 
mission on  economy  and  efficiency  a  statement  of  the  appro- 
priations for  the  preceding  fiscal  year,  including  those  met  by 
assessments,  the  expenditures  from  the  same  and  the  unex- 
pended balances  or  overdrafts  and  the  amount  of  outstanding 
obligations  payable  from  such  appropriations  at  the  close  of 
the  preceding  fiscal  year.  The  auditor  shall  further  submit  to 
the  commission  on  economy  and  efficiency  on  or  before  the 
fifteenth  day  of  December  of  each  year  his  estimates  for  the 
ordinary  and  other  revenue  of  the  commonwealth,  together 
with  a  statement  of  the  free  or  unincumbered  cash  balance  and 
other  resources  available  for  appropriation. 

Sec.  5.  The  commission  on  economy  and  efficiency  shall 
compile  all  estimates  and  requests  for  appropriations  and  bond 
issues,  and  shall  make  such  investigations  as  may  be  necessary 
to  enable  it  to  submit  recommendations  concerning  said  esti- 
mates and  requests  to  the  governor.  The  commission  fur- 
thermore shall  prepare  a  budget  for  the  governor  setting  forth 
such  recommendations  as  shall  be  determined  by  the  governor. 
Any  information  relative  to  estimates  or  appropriations  in  the 
possession  of  the  commission  on  economy  and  efficiency  shall 

145 


BUDGETARY  REFORM  IN  THE  STATES 

upon  request  be  given  to  either  branch  of  the  general  court 
or  to  the  ways  and  means  committee  of  either  branch  thereof. 

Sec.  6.  The  governor  shall  submit  to  the  general  court,  not 
later  than  the  first  Monday  in  February  of  each  year,  a  budget 
setting  forth  all  estimates  and  requests  for  appropriations  or 
grants  of  moneys  from  the  treasury  of  the  commonwealth. 
Save  in  matters  pertaining  to  the  legislature  and  judiciary,  the 
governor  shall  incorporate  in  said  budget  his  recommendations 
relative  to  the  amount  which  should  be  appropriated  for  each 
and  every  department,  board,  office,  institution,  activity,  un- 
dertaking or  purpose  which  is  to  receive  an  appropriation,  in- 
cluding those  supported  by  special  assessments.  In  submitting 
his  budget,  the  governor  shall  so  classify  and  designate  the 
•estimates  and  his  recommendations  therefor  as  to  show  sep- 
arately estimates  and  recommendations  for:  (a)  expenses  of 
administration,  operation  and  maintenance;  (b)  new  construc- 
tion, additions,  improvements  and  other  capital  outlays  to  be 
financed  from  revenue;  (c)  interest  on  the  public  debt  and  for 
sinking  fund  and  serial  bond  requirements  and  for  any  other 
fixed  charges;  and  (d)  deficiencies  or  overdrafts  in  appropria- 
tions of  former  years.  The  governor  shall  incorporate  in  his 
budget  his  recommendations  as  to  the  amount  which  should 
be  raised  by  a  state  tax.  The  governor  shall  also  include  in 
his  budget  all  requests  or  petitions  for  bond  issues  with  his 
recommendations  thereon.  Accompanying  his  budget,  the 
governor  may  submit  to  the  general  court  such  messages,  state- 
ments or  supplemental  data  with  reference  to  said  budget  as 
he  may  consider  expedient.  The  governor  may  also  submit  at 
any  time  to  the  general  court  supplemental  recommendations 
relative  to  appropriations,  revenues  or  loans.  The  governor's 
budget  shall  be  printed  and  copies  thereof  distributed  to  mem- 
bers of  the  general  court. 

Sec.  7.  Sections  three,  four  and  five  of  chapter  seven  hun- 
dred and  nineteen  of  the  acts  of  nineteen  hundred  and  twelve, 
and  all  other  acts  and  parts  of  acts  inconsistent  herewith  are 
hereby  repealed. 

Sec.  8.     This  act  shall  take  effect  upon  its  passage. 

vv  Oregon.  In  1913,  Oregon  passed  an  act  having  for  its 
purpose  to  ensure  that  the  estimates  of  government  services 
and  institutions  supported  in  whole  or  in  part  by  state  funds 
shall  get  before  the  legislature  as  a  consolidated  statement. 

146 


BUDGETARY  LEGISLATION 

It  provides  that  all  such  services  and  institutions  shall  submit 
their  estimates  to  the  secretary  of  state  in  the  form  prescribed 
by  the  latter  and  that  the  data  shall  be  compiled  in  such  form 
as  to  distinguish  between  at  least  current  expenses,  permanent 
improvements,  contingencies  and  all  other  expenditures  such 
as  replacements,  repairs,  materials  and  supplies.  The  secretary 
of  state  is  directed  to  compile  these  statements  and  the  Gover- 
nor to  submit  them  to  the  legislature  with  his  recommenda- 
tions. 

Though  this  act  goes  but  a  small  way  towards  making     v' 
provision  for  a  budgetary  system,  what  it  does  do  is  in  the 
right  direction  and  under  it  and  his  general  powers  it  would 
be  possible  for  the  Governor  to  lay  before  the  legislature 
something  in  the  nature  of  a  budget. 

A  copy  of  this  act  follows : — 

An  Act  to  provide  for  reports  of  the  several  State  officers, 
departments,  boards,  commissions  and  institutions,  etc.,  and 
to  provide  for  a  State  budget.  Filed  in  the  office  of  the 
Secretary  of  State  Feb.  27,  1913.  (Acts  of  1913,  Chap- 
ter 284.) 

Section  i.  On  or  before  November  I5th  of  each  even  num- 
bered year  there  shall  be  filed  with  the  Secretary  of  State  by 
each  State  officer,  head  of  department  or  proper  officer,  board, 
commission  or  trustee  in  charge  of  any  educational,  charitable, 
penal  or  other  institution,  and  all  other  State  officers,  depart- 
ments, boards  or  commissions,  now  existing  or  hereafter  con- 
stituted, supported  wholly  or  in  part  by  appropriations  from 
the  State  treasury,  including  appropriations  to  be  made  by 
assessment  and  levy  or  by  the  collection  of  license  or  other 
fees,  statements  in  detail  showing  the  amounts  appropriated 
for  the  current  and  the  next  preceding  biennial  period;  and 
the  amounts  required  by  such  State  officer,  department,  board 
or  commission,  for  the  proper  support  and  maintenance,  ex- 
tension or  improvement  of  the  department,  board,  commission, 
institution  or  undertaking,  in  his  or  their  charge  during  the 
ensuing  biennial  period,  with  reasons  therefor;  together  with 
an  estimate  of  the  probable  revenues  of  said  department, 
board,  commission,  institution  or  undertaking,  from  all  sources 

147 


BUDGETARY  REFORM  IN  THE  STATES 

including  assessment  and  levy  and  license  fees  for  the  ensuing 
biennial  period,  arranged  in  proper  manner  in  detail  by  classi- 
fications and  by  appropriate  summaries. 

Sec.  2.  Said  statements  of  moneys  required  for  the  sup- 
port, maintenance,  extension  or  improvement  of  the  several 
departments,  boards,  commissions,  institutions  or  undertak- 
ings shall  at  least  classify  their  needs  under  the  following 
heads  as  near  as  may  be  : 

(a)  Current  expenditure,   including  salaries  and  wages, 
subdivided  so  as  to  show  the  number  employed  and  wages  or 
salaries  paid,  proposed  increase,  proposed  decrease  and  pro- 
posed new  positions. 

(b)  Permanent  improvements,  as  new  buildings  or  other 
proper  investment.     In  case  of  new  buildings,  give  statement 
of  size,  manner  of  construction  and  the  estimate  of  costs  as 
computed  by  some  reliable  architect.    Also  state  the  immediate 
need  of  the  improvements. 

(c)  All  other  expenditures,  as  replacements,  repairs,  ma- 
terial and  supplies. 

(d)  Contingencies.     All  classifications  to  be  accompanied 
by  schedules  showing  exactly  how  the  money  appropriated 
is  to  be  used. 

Sec.  3.  Any  person  having  a  claim  against  the  State,  which 
requires  action  by  the  legislature,  shall  in  like  manner  file  with 
the  Secretary  of  State  a  statement  of  the  amount  of  such  claim, 
together  with  a  brief  statement  of  the  facts  upon  which  it  is 
based. 

Sec.  4.  The  Secretary  of  State  shall  also  receive  and  file  in 
his  office  a  statement  of  any  desired  appropriation,  for  any 
purpose  which  may  be  presented  to  him,  on  or  before  Novem- 
ber 1 5th  of  each  even  numbered  year,  by  any  individual,  cor- 
poration or  association,  including  municipal  corporations,  in- 
tending to  present  the  same  at  the  ensuing  session  of  the  leg- 
islature. 

Sec.  5.  Each  of  the  reports  and  statements  of  desired  ap- 
propriations thus  made  shall  be  in  a  form  to  be  prescribed  by 
the  Secretary  of  State. 

Sec.  6.  The  Secretary  of  State  may  also  from  time  to  time, 
and  in  his  discretion,  require  any  such  State  officers,  depart- 
ments, boards  or  commissions,  to  report  to  him  as  to  such  other 
fiscal  affairs  as  he  shall  deem  necessary  for  the  compilation  of 
the  tabulation  provided  for  by  this  act. 

148 


BUDGETARY  LEGISLATION 

Sec.  7.  On  or  before  December  I5th  of  each  even  num- 
bered year  the  Secretary  of  State  shall  make  a  tabulation  of 
the  statements  and  reports,  provided  for  by  the  preceding  sec- 
tions, in  printed  form,  accompanied  by  comparative  data  and 
estimates  of  income,  together  with  such  comments,  and  a  state- 
ment of  such  other  matters,  as  he  shall  deem  necessary  and 
proper  for  the  full  comprehension  of  such  tabulation,  showing 
the  several  amounts  asked  for  and  a  brief  description  of  each 
of  said  proposed  appropriations,  together  with  the  reasons 
therefor,  the  total  for  each  department,  board,  commission, 
institution  or  undertaking,  and  the  grand  total;  and  shall 
transmit  such  tabulation  to  the  members  of  the  legislature  for 
their  information  and  to  the  Governor,  whereupon  on  or  be- 
fore the  beginning  of  the  ensuing  session  of  the  legislature  the 
Governor  shall  transmit  the  same  to  the  members  of  the  leg- 
islature with  such  recommendations  as  he  may  deem  proper; 
provided,  also,  the  Governor  may  at  any  time  call  on  the  Sec- 
retary of  State  for  further  information. 

Sec.  8.  The  reports  and  statements  hereinbefore  provided 
for  shall  be  public  records. 

Washington.  In  1915,  Governor  Lister,  of  Washington, V* 
presented  estimates  to  the  legislature  though  there  was  at  that 
time  no  statute  directing  him  to  do  so.  Following  this  the 
legislature  on  March  17  of  the  same  year  passed  an  act  mak- 
ing  definite  provision  for  a  budget.  This  act  provides  that 
the  preparation  of  the  estimates  of  revenues  and  expenditures 
shall  be  entrusted  primarily  to  the  state  auditor.  That  officer, 
acting  through,  and  as  head  of,  the  Bureau  of  Inspection  and 
Supervision  of  Public  Offices,  has  large  powers  to  prescribe 
and  install  a  uniform  system  of  accounting  for  all  offices  and 
institutions  of  the  government.1  The  estimates  and  financial 
statements  compiled  by  him  must  be  submitted  to  the  State 
Board  of  Finance  upon  which  devolves  the  duty  of  formu- 
lating and  presenting  to  the  legislature  a  budget  setting  forth 
its  opinion  regarding  the  provision  that  should  be  made  for 

1  See,  An  act  establishing  a  Bureau  of  Inspection  and  Supervision 
of  Public  Offices  in  the  Department  of  the  State  Auditor,  General 
Statutes  1910,  Sections  8346-8. 

149 


BUDGETARY  REFORM  IN  THE  STATES 

the  revenue  and  expenditure  needs  of  the  ensuing  biennium. 
This  board  is  a  body  that  was  created  for  the  purpose  of 
attending  to  certain  financial  matters  such  as  the  investment 
of  public  funds  and  is  composed  of  the  Governor,  the  state 
treasurer  and  the  state  auditor.1 

It  will  be  seen  that  this  act  does  little  more  than  provide  for 
the  preparation  and  presentation  of  a  budget.  Taken  in  con- 
nection with  the  powers  of  the  auditor  to  prescribe  the  system 
of  accounting  of  the  state,  it  should  be  possible  under  it  to 
secure  a  budget  in  proper  form.  It  will  be  noted,  however, 
that  the  Governor  is  not  made  responsible  for  such  budget 
but  participates  in  its  preparation  and  presentation  only  as 
a  member  of  the  Board  of  Finance.  Following  is  a  copy  of 
this  act: 

An  Act  providing  for  the  establishment  of  a  budget  system 
for  state  offices,  departments  and  institutions.  Approved, 
March  17,  1915.  (Acts  of  1915,  Chapter  126.) 

Section  T.  On  or  before  the  I5th  day  of  October  of  every 
even-numbered  year  the  several  departments,  institutions,  com- 
missions and  officers  of  the  state  shall  report  to  the  state  board 
of  finance  on  forms  prescribed  and  according  to  the  classifi- 
cation adopted  by  the  state  auditor  through  the  bureau  of  in- 
spection and  supervision  of  public  offices,  an  estimate  in  item- 
ized form,  stating  the  amount  of  money  required  for  the  con- 
duct of  such  department,  institution,  commission  or  office  for 
the  biennial  period  beginning  on  the  first  day  of  April  there- 
after. 

Sec.  2.  The  state  auditor,  through  the  bureau  of  inspec- 
tion and  supervision  of  public  offices,  shall  assemble  said  state- 
ments in  proper  form  and  show  opposite  each  request  the 
amount  of  appropriation  made  for  the  current  biennium  and 
the  amount  expended  from  each  to  and  including  September 
30th,  immediately  preceding,  also  a  statement  showing  the  ac- 
tual revenues  of  the  state  for  the  twenty-four  months  ending 
September  3Oth,  and  the  estimated  receipts  from  all  sources 
for  the  next  fiscal  biennium.  This  statement  shall  be  sub- 

1  See,  An  act  creating  a  State  Board  of  Finance,  General  Statutes, 
1910,  Sections  5053,  et  seq. 

150 


BUDGETARY  LEGISLATION 

mitted  to  the  board  of  finance,  which  shall  make  such  recom- 
mendations as  it  may  deem  proper  opposite  the  requests  of  the 
several  departments,  institutions,  boards  and  commissions. 
This  consolidated  statement  shall  be  known  as  the  State 
Budget. 

Sec.  3.  The  departments,  institutions,  commissions  and 
officers  of  the  state,  upon  request,  shall  forthwith  furnish  to 
the  state  board  of  finance,  any  information  desired  in  relation 
to  the  affairs  of  their  respective  departments,  institutions,  com- 
missions or  offices. 

Sec.  4.  Upon  the  convening  of  each  regular  session  of  the 
legislature,  the  state  board  of  finance  shall  submit  to  the  leg- 
islature said  state  budget,  and  shall  cause  such  budget  to  be 
printed  and  mailed  to  each  member  of  the  legislature  at  least 
fifteen  days  before  the  convening  thereof. 

Sec.  5.  Said  board  may  make  such  investigation  of  the  af- 
fairs of  any  department,  institution,  commission  or  office  as 
it  may  deem  proper;  may  visit  and  inspect  any  department, 
institution,  commission  or  office;  administer  oaths;  examine 
such  persons  as  it  may  deem  necessary  and  compel  the  pro- 
duction of  books,  papers  and  records  of  such  department, 
institution,  commission  or  office  pertaining  to  its  expenditures. 
Any  necessary  expense  incurred  in  carrying  out  the  provisions 
of  this  act  shall  be  paid  out  of  the  appropriation  made  by  the 
legislature  for  the  executive  department. 


CHAPTER  VIII 

BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL 
STATES :  NEW  YORK 

New  York.  The  movement  for  governmental  reform  in 
f  the  state  of  New  York  is  second  only  in  importance  to  that  of 
the  national  government.  Though  efforts  to  improve  methods 
of  financial  administration  in  that  state  have  been  put  forth 
from  time  to  time  ever  since  the  state  was  created,  recogni- 
tion that  the  system  of  administration  in  force  was  funda- 
mentally defective  is  of  comparatively  recent  date.  Positive 
efforts  to  effect  a  radical  change  in  this  system  may  be  dated 
from  Governor  Hughes'  administration.  In  response  to  re- 
peated appeals  for  action  by  Governor  Hughes  there  was 
passed  in  1907  the  so-called  Moreland  act  which  authorized 
the  Governor,  either  in  person  or  by  agents  appointed  by  him, 
to  investigate  the  management  of  affairs  by  any  administra- 
tive service  of  the  government.  It  cannot  be  said,  however, 
that  much  in  the  way  of  permanent  results  was  accomplished 
under  this  act. 

In  1910,  however,  the  Governor  secured  the  passage  of  an 
act  having  for  its  purpose  to  ensure  that  estimates  of  expen- 
ditures should  be  compiled  and  presented  to  the  legislature  in 
better  form. 

This  law  provided  that,  on  or  before  November  I5th  of 
each  year,  each  state  officer  or  head  of  department  shall  file 
with  the  comptroller  a  statement,  in  detail,  of  all  money  for 
which  a  general  or  a  special  appropriation  is  desired  at  the 
ensuing  session  of  the  legislature,  together  with  the  reasons 
therefor.  From  these  reports  the  comptroller  is  to  make  a 
tabulation  containing,  first,  an  itemized  statement  of  the  actual 

153 


BUDGETARY  LEGISLATION 

expenditures  made  during  the  preceding  year;  second,  a  state- 
ment of  the  appropriations  made  for  the  preceding  year;  and, 
third,  a  statement  of  the  appropriations  desired  for  the  coming 
year.  These  desired  appropriations  are  summarized  under  the 
following  schedules : 

A.  Salaries  and  services  (including  wages  of  laborers) 

B.  Statistical     information     regarding     permanent     and 

C.  temporary  employees 

D.  General  expenses  and  office  equipment 

E.  Maintenance 

F.  Permanent  outlays 

G.  Miscellaneous  purposes 

H.  Portions  of  the  appropriations  which  will  lapse  within 
the  next  two  years 

I.  Estimated  appropriations  which  will  remain  unex- 
pended at  the  close  of  the  fiscal  year  1 

This  was  a  step  in  the  right  direction.  It  will  be  noted, 
however,  that  the  act  contains  no  suggestion  that  the  comp- 
troller should  act  otherwise  than  as  a  mere  compiling  agent. 

In  1913,  Governor  Sulzer  appointed  a  committee  to  make  a 
general  inquiry  into  the  conduct  of  affairs  by  the  administra- 
tive services  and  to  report  regarding  the  steps  that  should  be 
taken  to  put  this  management  upon  a  more  efficient  and 
economical  basis.  This  committee  made  three  general  recom- 
mendations: that  a  state  board  of  estimates  be  created,  com- 
posed of  state  officials,  to  have  the  duty  of  formulating  ap- 
propriation bills;  that  provision  be  made  for  a  commissioner 
of  economy  and  efficiency  who  should  have  the  duty  of  mak- 
ing investigation  of  administrative  services  and  recommend- 
ing action  to  be  taken  to  put  this  management  upon  a  more 
efficient  basis;  and  that  the  system  of  making  appropriations 
be  changed  in  certain  respects. 

The  first  two  of  these  recommendations  were  accepted  by 
the  legislature.  By  acts  passed  in  1913  provision  was  made 
for  a  State  Board  of  Estimates  and  a  Department  of  Efficiency 

1  Budget  Legislation  in  Two  States.     Municipal  Research  No.  70, 

PP.  30-3L  ,.-.  J 

153 


BUDGETARY  REFORM  IN  THE  STATES 

and  Economy,  with  the  provision  that  the  head  of  the  latter 
should  be  secretary  of  the  former.1 

Neither  of  these  bodies  succeeded  in  accomplishing  what 
*S  was  expected  of  them  and  both  were  abolished  in  191 5. 2  The 
reason  for  this  action  appears  to  be  that,  due  to  political 
|  antagonism,  the  legislature  did  not  take  kindly  to  them  and 
disregarded,  if  it  did  not  actually  hamper,  their  work.  The 
Department  of  Efficiency  and  Economy,  in  pursuance  of  the 
requirement  of  law  providing  for  its  creation,  prepared  and 
submitted  to  the  legislature,  under  date  of  January  21,  1915, 
a  budget.  This  made  a  large  volume  of  995  pages  and  in- 
cludes, in  addition  to  the  budget  proper,  a  budgetary  mes- 
sage and  a  summary  of  the  budget.  In  form  the  budget  as 
prepared  consisted  of  the  estimates  as  formulated  by  the  de- 
partments with  the  recommendations  of  the  Department  of 
Efficiency  and  Economy  for  their  increase  or  decrease.  It 
does  not  appear  that  the  legislature  gave  much  if  any  weight 
to  their  recommendations.  This  is  as  might  have  been  ex- 
pected since,  to  have  weight,  recommendations  for  changes 
in  estimates  as  prepared  by  spending  departments  should  go 
to  the  legislature  with  the  full  authority  of  the  chief  executive 
who  is  the  administrative  superior  of  such  departments  and 
the  one  executive  officer  to  whom  the  legislature  should  look 
for  an  authoritatively  formulated  financial  and  work  program. 

This  was  the  situation  of  affairs  when  the  convention  to 
revise  the  state  constitution  assembled  in  1915.  It  was  in- 
evitable, in  view  of  the  wide  interest  that  had  been  shown  in 
the  subject,  that  budgetary  reform  should  receive  special  at- 
tention at  the  hands  of  this  body.  In  promoting  action  the 
^  Bureau  of  Municipal  Research  of  New  York  can  fairly  claim 
leadership.  It  was  untiring  in  its  efforts  to  have  the  problem 
'  presented  to  the  convention  in  proper  form  and  to  secure  the 
action  of  that  body  that  would  assure  to  the  state  the  definite 
adoption  of  a  scientific  budgetary  system.  It  especially  sought 

*Acts  of  1913,  Chapters  280  and  281. 
'Acts  of  1915,  Chapter  17. 

154 


BUDGETARY  LEGISLATION 

to  make  clear  that  the  establishment  of  such  a  system  required 
a  radical  change  in  many  features  of  the  constitutional  system 
of  the  state.  As  Prof.  Beard  has  excellently  put  it: 1 

The  Budget  is  the  very  heart  of  the  governing  process;  it 
involves  fundamental  problems  in  administrative  organization    \/ 
in  public  policy,  in  legislative  responsibility,  and  in  political 
leadership.     Sound  budgetary  procedure  cannot  be  injected 
into  the  hopelessly  disorganized  governments  of  American 
commonwealths.     It  requires  a  thoroughgoing  reconstruction, 
even  of  the  very  elemental  parts  of  the  government  frame-/* 
work. 

Due  to  an  appreciation  of  this  fact  the  Bureau  of  Municipal 
Research  prepared  the  way  for  the  consideration  of  the  prob- 
lem of  budgetary  reform  by  the  convention  by  the  preparation 
in  conjunction  with  the  State  Department  of  Efficiency  and 
Economy  of  a  detailed  description  of  the  administrative  or- 
ganization and  functions  of  the  government.2  This  study, 
which  was  purely  one  of  description  of  existing  conditions, 
it  followed  up  at  the  request  of  the  Constitutional  Convention 
Commission  by  a  critical  appraisal  in  which  it  pointed  out  the 
multiplicity  of  the  services  and  the  need  for  the  establishment 
of  a  budgetary  system  as  a  means  for  currently  coordinating 
and  controlling  their  activities.3 

"Having  thus  laid,"  as  Prof.  Beard  points  out,  "both  the 
fact  and  the  philosophical  basis  for  a  scientific  budget  system," 
the  bureau  prepared  a  series  of  bills  embracing  the  following 
features : 

1  The   Budgetary  Provisions   of  the   New  York  Constitution,  by  *~ 
Charles  A.  Beard,  Annals  of  the  American  Academy  of  Political  and 
Social  Science,  Nov.,  1915,  p.  65.  S 

3  Government  of  the  State  of  New  York.    .A  description  of  itsc* 
organization  and  functions.    Prepared  for  the  New  York  State  Con- 
stitutional Convention  Commission  by  the  New  York  Department  of 
Efficiency  and  Economy,  and  the  New  York  Bureau  of  Municipal 
Research,  January  I,  1915. 

8  The  Constitution  and  Government  of  the  State  of  New  York, 
Municipal  Research,  May,  1915. 

155 


BUDGETARY  REFORM  IN  THE  STATES 

1.  The  appointment  of  the  heads  of  the  great  administra- 
tive departments  by  the  Governor,  although  several  officers, 
owing  to  political  exigencies,  are  left  elective; 

2.  The  establishment  of  a  Governor's  cabinet,  composed 
of  the  executive  heads  of  the  administration  under  the  Gov- 
ernor as  chief  executive; 

3.  The  organization  of  a  Governor's  staff  to  serve  as  a 
research  and  investigative  agency  for  the  chief  executive; 

4.  The  initiation  of  the  budget  by  the  Governor; 

5.  The  right  of  the  Governor  and  his  representatives  to 
appear  before  the  Legislature  to  submit,  explain  and  defend 
administrative  measures ; 

6.  In  case  of  the  refusal  of  the  legislature  to  pass  such 
measures,  the  right  of  the  Governor  to  dissolve  the  Legisla- 
ture and  submit  the  issue  to  the  voters ; 

7.  A  constitutional  procedure  for  locating  responsibility 
and  for  giving  publicity  to  the  discussion  of  all  issues  which 
arise,  whether  they  pertain  to  administrative  measures  or  to 
the  bills  of  members.     In  other  words,  to  do  away  with  the 
invisible  government  by  establishing  visible  government.1 

The  proposals  here  put  forth,  the  bureau  followed  up  by 
seeing  that  they  were  properly  presented  and  supported  by 
arguments.  Largely  through  its  instrumentality  a  number  of 
prominent  and  competent  men  appeared  before  the  committees 
of  the  Constitutional  Convention  on  state  finances,  revenue  and 
expenditures  and  the  Governor  and  other  state  officers,  and 
supported  the  principles  embodied  in  the  proposed  amend- 
ments.2 

It  would  be  out  of  place  here  to  consider  the  action  taken 
by  the  convention  in  respect  to  all  these  important  features 
of  proposed  constitutional  change.  The  effort  to  have  the 
convention  adopt  the  principles  of  a  budget,  however,  met  with 
complete  success  and  thus  was  prepared  and  included  in  the 

'The  Budgetary  Provisions  of  the  New  York  Constitution,  by 
Charles  A.  Beard,  Annals,  etc.,  Nov.,  1915,  pp.  65-66. 

2  For  a  full  report  of  these  hearings  see,  Budget  Systems,  Munici- 
pal Research  No.  62,  and  State  Administration,  Municipal  Research, 
No.  63. 

156 


BUDGETARY  LEGISLATION 

draft  of  the  constitution  that  was  submitted  to  the  people  the 
provisions  that  follow.  These  provisions  were  inserted  in 
the  draft  constitution  by  the  large  vote  of  132  to  4. 

Budget  Provision  of  Proposed  New  York  Constitution,  1915. 

Article  V. 

Section  i.  On  or  before  the  fifteenth  day  of  November 
*  *  *  the  head  of  each  department  of  the  state  govern- 
ment except  the  legislature  and  judiciary,  shall  submit  to  the 
governor  itemized  estimates  of  appropriations  to  meet  the 
financial  needs  of  such  department,  including  a  statement  in 
detail  of  all  moneys  for  which  any  general  or  special  appropri- 
ation is  desired  at  the  ensuing  session  of  the  legislature,  class- 
ified according  to  relative  importance  and  in  such  form  and 
with  such  explanations  as  the  governor  may  require. 

The  governor,  after  public  hearing  thereon,  at  which  he  may 
require  the  attendance  of  heads  of  departments  and  their  sub- 
ordinates, shall  revise  such  estimates  according  to  his  judg- 
ment. 

Itemized  estimates  of  the  financial  needs  of  the  legislature 
certified  by  the  presiding  officer  of  each  house  and  of  the  judi- 
ciary certified  by  the  comptroller  shall  be  transmitted  to  the 
governor  before  the  fifteenth  day  of  January  next  succeeding 
for  inclusion  in  the  budget  without  revision  but  with  such 
recommendation  as  he  may  think  proper. 

On  or  before  the  first  day  of  February  next  succeeding  he 
shall  submit  to  the  legislature  a  budget  containing  a  complete 
plan  of  proposed  expenditures  and  estimated  revenues.  It 
shall  contain  all  the  estimates  so  revised  or  certified  and  shall 
be  accompanied  by  a  bill  or  bills  for  all  proposed  appropria- 
tions and  reappropriations,  clearly  itemized;  it  shall  show  the 
estimated  revenues  for  the  ensuing  fiscal  year  and  the  esti- 
mated surplus  or  deficit  of  revenues  at  the  end  of  the  current 
fiscal  year  together  with  the  measures  of  taxation,  if  any, 
which  the  governor  may  propose  for  the  increase  of  the  reve- 
nues. It  shall  be  accompanied  by  a  statement  of  the  current 
assets,  liabilities,  reserves  and  surplus  or  deficit  of  the  state; 
statements  of  the  debts  and  funds  of  the  state;  an  estimate  of 
its  financial  condition  as  of  the  beginning  and  end  of  the  en- 
suing fiscal  year ;  and  a  statement  of  revenues  and  expenditures 

157 


BUDGETARY  REFORM  IN  THE  STATES 

for  the  two  fiscal  years  next  preceding  said  year,  in  form  suit- 
able for  comparison.  The  governor  may,  before  final  action 
by  the  legislature  thereon,  amend  or  supplement  the  budget. 

A  copy  of  the  budget  and  of  any  amendments  or  additions 
thereto  shall  be  forthwith  transmitted  by  the  governor  to  the 
comptroller. 

The  governor  and  the  heads  of  such  departments  shall  have 
the  right,  and  it  shall  be  their  duty  when  requested  by  either 
house  of  the  legislature,  to  appear  and  be  heard  in  respect  to 
the  budget  during  the  consideration  thereof,  and  to  answer 
inquiries  relevant  thereto.  The  procedure  for  such  appear- 
ance and  inquiries  shall  be  provided  by  law.  The  legislature 
may  not  alter  an  appropriation  bill  submitted  by  the  governor 
except  to  strike  out  or  reduce  items  therein ;  but  this  provision 
shall  not  apply  to  items  for  the  legislature  or  judiciary.  Such 
a  bill  when  passed  by  both  houses  shall  be  a  law  immediately 
without  further  action  by  the  governor,  except  that  appropria- 
tions for  the  legislature  and  judiciary  shall  be  subject  to  his 
approval  as  provided  in  section  nine  of  article  four. 

Neither  house  shall  consider  further  appropriations  until  the 
appropriation  bills  proposed  by  the  governor  shall  have  been 
finally  acted  on  by  both  houses ;  nor  shall  such  further  appro- 
priations be  then  made  except  by  separate  bills  each  for  a  single 
work  or  object,  which  bills  shall  be  subject  to  the  governor's 
approval  as  provided  in  section  nine,  article  four.  Nothing 
herein  contained  shall  be  construed  to  prevent  the  governor 
from  recommending  that  one  or  more  of  his  proposed  bills 
be  passed  in  advance  of  the  others  to  supply  the  immediate 
needs  of  the  government. 

As  is  well  known  this  draft  of  the  new  constitution,  of 
which  this  section  was  a  part,  was  defeated  by  the  people  at 
the  polls  in  November,  1915.  Though  this  promising  effort 
to  put  the  financial  system  of  New  York  upon  a  budgetary 
basis  failed  the  work  was  by  no  means  a  total  loss.  It  was 
of  enormous  value  in  educating  the  public,  not  only  of  New 
York  state  but  of  the  entire  country  in  the  importance  of  the 
proposal  and  in  the  specific  steps  that  must  be  taken  to  put 
the  reform  into  effect. 

That  the  matter  of  budgetary  reform  was  not  to  be  laid 
aside  by  the  failure  of  a  proposed  revised  constitution  was 

158 


BUDGETARY  LEGISLATION 

immediately  made  known  by  the  action  of  Governor  Whitman 
and  by  the  legislature  which  convened  in  January,  1916.  The 
strong  endorsement  by  the  Constitutional  Convention  of  the 
principles  of  a  budget  was  sufficient  warrant  to  Governor 
Whitman  to  do  what  he  could  in  this  direction  under  existing 
laws.  He  devoted  his  annual  message  to  the  legislature,  sub- 
mitted January  5,  1916,  to  the  subject  of  state  finances  and  * 
transmitted  therewith  a  book  of  estimates  denominated  "Ten- 
tative Budget  Proposals."  The  submission  of  this  document 
led  the  Bureau  of  Municipal  Research  to  subject  it  to  critical  •* 
comment  for  the  purpose  of  pointing  out  wherein  it  failed  to 
meet  the  full  requirements  of  a  scientific  budget.  This  it  did 
by  means  of  a  statement  given  to  the  press,  a  memorial  laid 
before  the  legislature  and  a  letter  addressed  to  the  Governor. 
The  more  important  criticisms  made  were:  that  the  budget 
dealt  only  with  expenditure  proposals  and  contained  no  plans 
for  financing  the  state  during  the  year;  and  that  provision 
was  not  made  for  receiving  adequate  publicity  and  proper 
consideration  in  the  open  by  the  legislature  of  financial  pro- 
posals. In  making  these  criticisms  the  bureau,  however,  ap- 
proved heartily  the  action  of  the  Governor  so  far  as  it  went. 
In  its  statement  to  the  press  it  said : 

The  Bureau  approves  heartily  the  action  of  the  Governor 
and  congratulates  him  on  having  taken  a  long  step  in  the  right 
direction  when  he  assembled  and  critically  reviewed  the  esti- 
mates of  all  the  executive  departments  and  sent  to  the  legis- 
lature a  consolidated  estimate  in  the  form  of  a  single  appro- 
priation bill.  This  alone  is  an  important  proposal. 

To  the  bureau's  letter  to  him  the  Governor  made  an  inter- 
esting reply,  in  which  he  took  the  position  that  the  bureau 
had  misinterpreted  to  some  extent  the  character  of  what  he 
had  attempted  to  do  in  submitting  his  budgetary  proposal. 
He  said : 

Your  assumption  that  I  am  in  favor  of  the  preparation 
annually  by  the  Executive  of  a  complete  appropriation  act,  all 

159 


BUDGETARY  REFORM  IN  THE  STATES 

of  the  items  of  which  shall  have  the  final  approval  of  the 
Executive,  and  that  this  proposed  appropriation  act  shall  be 
submitted  to  the  legislature  as  an  established  executive  pro- 
cedure is  incorrect. 

I  am  in  favor  of  the  Executive  going  just  as  far  in  this  mat- 
ter as  I  have  done  in  my  Tentative  Budget  Proposal,  now 
before  the  legislature,  namely,  that  the  Governor  submit  to  the 
legislature  at  the  opening  of  the  session  during  his  term,  or, 
at  the  expiration  of  his  term,  prepare  for  submission  to  the 
following  legislature  a  tentative  appropriation  budget  for  all 
the  departments  which  are  under  Executive  control,  and  in 
such  document  to  indicate  as  nearly  as  possible  the  judgment 
of  the  Executive  as  to  what  the  expenditures  for  those  de- 
partments should  be  for  the  next  fiscal  year,  and  together  with 
these  revised  estimates  present  the  estimates  of  other  depart- 
ments as  submitted  to  the  comptroller,  subject  only  to  revision 
as  to  classifications  of  expenditures.  I  have  done  this  in  the 
present  instance  under  existing  laws  and  I  cannot  conceive 
that  succeeding  Executives  will  require  the  restraint  of  a  leg- 
islative act  to  prevent  their  return  to  the  old  procedure.  *  *  * 

My  budget  proposal  goes  as  far  as  I  deemed  it  advisable 
for  the  Executive  to  go  and  does  not  attempt  to  establish  the 
principle  that  the  Executive  shall  originate  appropriations. 
The  expression  by  the  Executive  of  what  he  deems  shall  be 
the  allowances  for  the  departments  controlled  by  him  is  in 
effect  a  consolidation  and  review  of  departmental  estimates  by 
the  Executive  before  they  are  submitted  to  the  legislature  for 
consideration  and  in  no  wise  changes  the  principles  established 

either  under  the  present  constitution  or  under  existing  law. 

*     *     * 

Whatever  may  be  my  theoretical  views  as  to  the  State  bud- 
get procedure,  except  in  respect  to  the  right  of  the  Executive 
to  reduce,  as  well  as  to  veto  items,  I  am  opposed  to  any  ex- 
tension of  this  procedure  beyond  the  limitations  established 
by  the  existing  constitution,  and  it  is  obvious  that  the  existing 
constitution  contemplates  that  both  appropriation  and  revenue 
measures  shall  originate  in  the  Legislature,  and  not  in  the 
Executive  branch  of  the  government.1 

'For  copies  of  the  Bureau's  Statement  to  the  Press,  Memorial  to 
the  Legislature  and  Letters  to  the  Governor,  and  the  latter's  reply 
and  the  Bureau's  reply  to  the  Governor,  see  Municipal  Research,  No. 
69.  For  an  account  of  the  attempt  of  Governor  Whitman  to  estab- 

160 


BUDGETARY  LEGISLATION 

This  statement  of  Gov.  Whitman  has  been  reproduced  since 
it  brings  out  so  clearly  the  distinction  between  the  respon- 
sibility of  the  executive  of  preparing  a  proper  budget  and  that 
of  the  legislature  in  acting  upon  such  budget.  It  need  hardly 
be  said  that  important  as  was  the  action  of  the  Governor  it 
did  not  represent  a  budget  as  that  term  is  employed  as  cover- 
ing a  complete  financial  program,  from  the  revenue  as  well 
as  the  expenditure  standpoint. 

This  first  step  of  the  Governor  towards  the  establishment 
of  the  principle  of  having  the  chief  executive  submit  a  program 
of  expenditure  corresponding  to  his  opinion  regarding  the 
money  that  should  be  voted  for  the  support  of  the  government, 
or  that  part  of  the  government  in  respect  to  which  he  had 
responsibility,  did  not  meet  with  any  cordial  response  on  the 
part  of  the  legislature.  The  latter  continued  to  follow  the 
procedure  that  it  had  employed  in  the  past  in  respect  to  the 
framing  and  voting  of  appropriations.  Instead  of  making  the 
Governor's  budget  the  basis  for  a  single  appropriation  bill, 
provision  was  made  as  formerly  for  the  expenditure  needs  of 
the  government  by  a  multiplicity  of  acts.  One  hundred  and 
thirty-five  bills  carrying  an  appropriation  were  introduced  of 
which  46  were  passed  and  35  received  the  Governor's  ap- 
proval. 

The  legislature,  on  the  other  hand,  did  not  ignore  the  ques- 
tion of  budgetary  reform.  Various  proposals  in  this  direc- 
tion were  introduced.  Another  one,  known  as  the  Sage-Maier 
bill,  was  enacted  and  received  the  approval  of  the  Governor 
April  5,  1916.  In  form  this  act  is  an  amendment  of  the 
legislative  law,  or,  to  give  its  full  title,  "An  Act  in  Relation 

lish  the  practice  of  the  Governor  submitting  on  his  responsibility 
a  completed  statement  of  the  provision  which,  in  his  opinion,  should 
be  made  for  the  support  of  the  administrative  services  of  the  govern- 
ment and  its  reception  by  the  legislature,  see  the  Monograph  by  B.  S. 
Schultz,  The  History  of  Appropriations  in  the  Legislative  Session  of 
1916,  New  York  State  (Doctor's  Dissertation,  Columbia  University, 
Privately  printed).  This  Monograph  was  reprinted  as  Municipal  Re- 
search No.  72. 

161 


BUDGETARY  REFORM  IN  THE  STATES 

to  Legislation,  constituting  Chapter  32  of  the  Consolidated 
Laws/'  to  which  it  adds  7  new  sections. 

It  cannot  be  said  that  this  law  represents  any  substantial 
progress  towards  the  adoption  by  the  government  of  a  scien- 
tific budget  system.  The  primary  requirement  of  such  a  sys- 
tem is  that  the  chief  executive  shall,  on  his  responsibility,  as 
head  of  the  administrative  branch,  submit  a  report  of  past 
operations  and  present  conditions  and  on  the  basis  of  this  his 
financial  and  work  program  for  the  future.  A  reading  of  this 
act  shows  that  the  real  responsibility  for  doing  this  is  placed 
upon  the  committees  of  the  two  houses  dealing  with  financial 
matters.  Section  31  reads: 

The  finance  committee  of  the  senate  and  the  ways  and  means 
committee  of  the  Assembly,  acting  jointly  or  separately,  shall 
annually  prepare  and  submit  to  the  respective  houses,  not  later 
than  March  fifteenth,  a  budget  containing,  etc. 

It  is  true  that  Section  26  provides  that: 

The  Governor  shall  annually,  within  one  week  after  the 
convening  of  the  legislature,  submit  to  the  senate  and  assem- 
bly a  statement  of  the  total  amount  of  appropriations  desired 
by  each  state  department,  commission,  board,  bureau,  office 
and  institution  and  may  at  the  same  time  make  such  sugges- 
tions for  reductions  or  additions  thereto,  as  he  deems  proper. 
He  may  also  at  the  same  time  submit  as  a  part  of  such  state- 
ment an  estimate  of  the  probable  revenues  of  the  state  for  the 
coming  fiscal  year. 

In  respect  to  this  provision  it  is  to  be  noted  that  all  the 
Governor  is  called  upon  to  do  is  to  submit  a  statement  of  the 
total  amounts  of  appropriations  desired  by  the  several  services. 
The  figures  to  be  submitted  are  the  estimates  of  heads  of  the 
services  themselves  and  these  need  be  only  of  the  total  sums 
desired.  Nothing  is  here  said  about  a  "complete  and  de- 
tailed statement"  such  as  is  called  for  from  the  legislative 
committees.  No  use  is  made  of  the  word  "budget"  as  is 

162 


BUDGETARY  LEGISLATION 

employed  in  defining  the  duties  of  the  committees.  No  ob- 
ligation is  imposed  upon  the  Governor  to  give  his  opinion 
regarding  the  propriety  of  granting  the  requests  of  the  serv- 
ices; it  is  merely  provided  that  he  may  make  suggestions  of 
this  kind  if  he  desires  to  do  so. 

The  act  thus  takes  the  distinctly  backward  step  of  provid- 
ing that,  not  only  shall  the  budget  be  acted  upon  by  the  legis- 
lature, but  that  it  shall  be  prepared  by  that  body.  Its  whole 
purpose  is  to  lessen  the  responsibility  of  the  Governor  and 
thus  to  go  counter  to  the  very  foundation  principle  not  only 
of  a  correct  budgetary  system  but  of  administration  generally. 
Unfortunate  under  any  circumstances,  this  action  is  specially 
to  be  regretted  in  view  of  the  great  advance  that  has  been 
made  in  the  direction  of  educating  public  opinion  as  to  the 
desirability  of  a  budgetary  system  represented  by  the  work  of 
the  Constitutional  Convention  of  1915.  The  act  reads  as 
follows : 

An  Act  to  amend  the  legislative  law,  in  relation  to  financial 
information  for  the  use  of  the  legislature  and  the  prepara- 
tion of  the  annual  budget  and  appropriation  bills.  Approved 
April  5,  1916.  (Acts  of  1916,  Chapter  130.) 

Section  i.  Article  two  of  chapter  thirty-seven  of  the  laws 
of  nineteen  hundred  and  nine,  entitled  "An  act  in  relation  to 
legislation,  constituting  chapter  thirty-two  of  the  consolidated 
laws,"  is  hereby  amended  by  adding  at  the  end  thereof  seven 
new  sections,  to  be  sections  twenty-six,  twenty-seven,  twenty- 
eight,  twenty-nine,  thirty,  thirty-one  and  thirty-two,  to  read, 
respectively,  as  follows : 

Sec.  26.  The  governor  shall  annually,  within  one  week 
after  the  convening  of  the  legislature,  submit  to  the  senate 
and  assembly  a  statement  of  the  total  amount  of  appropria- 
tions desired  by  each  state  department,  commission,  board, 
bureau,  office  and  institution,  and  may  at  the  same  time  make 
such  suggestions  for  reductions  or  additions  thereto,  as  he 
deems  proper.  He  may  also  at  the  same  time  submit  as  a  part 
of  such  statement  an  estimate  of  the  probable  revenues  of  the 
state  for  the  ensuing  fiscal  year. 

Sec.  27.     The  chairman  of  the  finance  committee  of  the 

163 


BUDGETARY  REFORM  IN  THE  STATES 

senate  shall  appoint  the  clerk  of  such  committee.  The  chair- 
man of  the  ways  and  means  committee  of  the  assembly  shall, 
appoint  the  clerk  of  such  committee.  Each  appointment  shall 
be  evidenced  by  certificate  duly  executed  by  the  officer  mak- 
ing the  appointment,  and  filed  in  the  office  of  the  secretary  of 
state.  Such  clerks  shall  hold  office  until  their  successors  are 
appointed. 

Sec.  28.  Such  clerks  shall  receive  an  annual  salary  of  four 
thousand  dollars  each  and  shall  be  paid  their  office,  traveling 
and  other  expenses  necessarily  incurred  by  them  in  the  per- 
formance of  their  duties.  The  chairman  of  the  finance  com- 
mittee of  the  senate  and  the  chairman  of  the  ways  and  means 
committee  of  the  assembly  may  each  appoint  for  the  commit- 
tee of  which  he  is  chairman  a  stenographer  and  an  accountant 
to  assist  such  committee  and  the  clerk  thereof  in  performing 
the  duties  prescribed  by  this  article.  The  compensation  of 
such  employees  of  the  finance  committee  of  the  senate  shall 
be  fixed  by  the  chairman  of  the  finance  committee  with  the 
approval  of  the  temporary  president  of  the  senate,  and  the 
compensation  of  such  employees  of  the  ways  and  means  com- 
mittee of  the  assembly  shall  be  fixed  by  the  chairman  of  the 
ways  and  means  committee  with  the  approval  of  the  speaker. 

Sec.  29.  For  the  purpose  of  more  effectively  carrying  out 
the  provisions  of  this  article,  the  committee  on  finance  ap- 
pointed under  the  rules  of  the  senate  and  the  committee  on 
ways  and  means  appointed  under  the  rules  of  the  assembly 
shall  continue  during  the  recess  of  the  legislature,  and  the 
chairmen  of  the  respective  committees  shall  have  the  power 
to  name  subcommittees  to  perform  such  duties  as  they  may 
prescribe  in  gathering  information  as  to  the  financial  needs  of 
the  various  charitable  institutions,  state  hospitals,  state  prisons 
and  other  departments,  boards,  bureaus,  commissions,  offices 
and  institutions  of  the  state.  The  members  of  such  subcom- 
mittees so  serving  shall  be  paid  their  necessary  traveling  ex- 
penses in  the  performance  of  their  duties. 

Sec.  30.  The  clerk  of  the  finance  committee  of  the  senate 
and  the  clerk  of  the  ways  and  means  committee  of  the  assem- 
bly shall 

i.  Collect,  compile  and  collate  information  and  data  relat- 
ing to  state  departments,  commissions,  boards,  bureaus,  offices, 
institutions,  public  works  and  other  subjects  for  which  ap- 
propriations are  made  or  sought. 

164 


BUDGETARY  LEGISLATION 

2.  Prepare  and  make  available  for  the  use  of  such  com- 
mittees tables  showing  appropriations  made  by  the  legislature 
from  time  to  time  and  prepare  and  furnish  when  requested  by 
such  committee  statistics  and  other  information  relating  to 
such  appropriations. 

3.  Procure,  compile  and  make  available  for  the  use  of  such 
committees  statistics  as  to  the  revenues  of  the  state  during 
the  preceding  year  and  the  estimated  revenues  for  the  current 
and  ensuing  fiscal  year. 

4.  File,  preserve  and  maintain  permanent  records  of  in- 
formation and  data  collected  pursuant  to  this  section,  includ- 
ing correspondence  in  relation  thereto. 

5.  Investigate  and  report  on  requests  for  appropriations 
and  the  needs  therefor. 

6.  Aid  either  of  such  committees  and  the  members  there- 
of in  making  any  investigation  which  may  be  required  or  au- 
thorized by  either  of  such  committees  or  by  the  legislature 
and,  when  requested  so  to  do,  aid  any  other  legislative  com- 
mittee in  making  investigations  pertaining  to  expenditure  of 
state  funds. 

7.  Aid  the  finance  committee  of  the  senate  and  the  ways 
and  means  committee  of  the  assembly,  when  requested,  in  the 
preparation  of  the  annual  budget  and  meet  and  confer  with  the 
said  committees  for  the  purpose  of  assisting  in  the  prepara- 
tion,  amendment   and    revision   of   bills   appropriating   state 
moneys  and  otherwise  aid  such  committees  or  either  of  them 
in  the  performance  of  their  duties. 

8.  For  the  purposes  of  this  section,  have  access  at  all  rea- 
sonable times  to  offices  of  state  departments,   commissions, 
boards,  bureaus  and  offices,  to  institutions  and  to  all  public 
works  of  the  state  and  they  may,  for  the  purpose  of  obtain- 
ing information  as  to  the  operations  and  the  fiscal  needs  there- 
of, examine  the  books,  papers  and  public  records  therein.  Such 
state  departments,  commissions,  boards,  bureaus,  offices  and 
institutions  shall  through  their  proper  officers  or  deputies  fur- 
nish such  data,  information  or  statements  as  may  be  neces- 
sary for  the  proper  exercise  of  their  powers  and  duties  and 
for  the  purpose  of  carrying  into  effect  the  provisions  of  this 
article.    The  clerks  of  the  finance  and  ways  and  means  com- 
mittees in  exercising  the  powers  and  performing  the  duties 
prescribed  by  this  section  may  act  jointly,  or  separately,  as  they 
deem  advisable.    All  data  and  other  information  or  statements 

165 


BUDGETARY  REFORM  IN  THE  STATES 

collected  by  such  clerks  shall  be  accessible  at  all  times  to  the 
inspection  of  the  governor,  or  to  a  person  designated  by  him 
for  such  purpose. 

Sec.  31.  The  finance  committee  of  the  senate  and  the  ways 
and  means  committee  of  the  assembly,  acting  jointly  or  sep- 
arately, shall  annually  prepare  and  submit  to  the  respective 
houses,  not  later  than  March  fifteenth,  a  budget  containing  a 
complete  and  detailed  statement  of  all  appropriations  to  be 
made  out  of  moneys  of  the  general  fund  in  the  state  treasury 
for  the  support  and  maintenance  of  the  government  of  the 
state  and  for  all  other  purposes,  which  appropriations  or  any 
part  thereof  shall  become  available  during  the  period  ending 
with  the  ensuing  fiscal  year.  Such  budget  shall  specify  the 
department,  board,  bureau,  commission,  office  or  institution 
under  whose  supervision  or  control  the  moneys  to  be  so  appro- 
priated are  to  be  expended  and  the  purposes  for  which  such 
appropriations  are  made.  There  shall  be  attached  to  and  made 
a  part  of  such  budget  an  itemized  and  detailed  estimate  of  the 
probable  revenues  of  the  state  out  of  which  the  appropriations 
specified  in  such  budget  may  be  paid,  and  such  budget  shall  in- 
clude an  estimate  of  the  amount  which  it  will  be  necessary  to 
raise  by  a  direct  tax  for  the  payment  of  such  appropriations. 
Such  budget  may  be  accompanied  by  a  statement  containing 
such  information  and  data  as  the  committees  may  deem  ad- 
visable to  present. 

Sec.  32.  The  respective  committees  shall  present  with  the 
budget  a  single  bill  providing  the  appropriations  contained 
therein.  The  appropriation  bill  thus  reported  shall  be  referred 
to  the  committee  of  the  whole  of  the  senate  and  shall  be  ad- 
vanced to  the  order  of  second  reading  in  the  assembly,  and 
shall  remain  before  the  committee  of  the  whole  of  the  sen- 
ate and  on  the  order  of  second  reading  in  the  assembly  for 
its  consideration  at  least  five  full  legislative  days,  and  on 
each  of  such  days  the  bills  x  shall  be  the  special  order  of  the 
day.  While  the  bill  is  under  consideration  in  the  committee 
of  the  whole  in  the  senate  or  on  second  reading  in  the  assem- 
bly, the  head  of  any  department,  office,  board,  bureau,  com- 
mission or  institution  of  the  state,  may,  and  when  requested 
by  a  majority  vote  of  either  house,  shall,  appear  and  shall  be 
heard  and  answer  inquiries  by  members  pertinent  to  the  appro- 
priation bill  then  under  consideration.  All  meetings  of  either 

1  So  in  original. 

166 


BUDGETARY  LEGISLATION 

house  for  the  consideration  of  the  appropriation  bill  shall  be 
open  to  the  public.  While  the  bill  is  before  the  committee  of 
the  whole  of  the  senate  or  on  the  order  of  second  reading  in 
the  assembly,  it  may  be  amended  either  by  inserting  additional 
items  or  by  increasing,  reducing  or  eliminating  items ;  but  on 
third  reading  no  amendments,  except  to  reduce  or  eliminate  an 
item  in  the  bill,  shall  be  in  order,  except  by  unanimous  consent. 
The  bill  when  advanced  to  the  order  of  third  reading  in  either 
house  shall  be  a  special  order  of  the  day  for  at  least  three  full 
legislative  days. 

Sec.  2.     This  act  shall  take  effect  immediately. 


CHAPTER  IX 

BUDGETARY  LEGISLATION  BY  THE  INDIVIDUAL 
STATES :  ALABAMA,  ARIZONA,  ARKANSAS,  COL- 
ORADO, FLORIDA,  MICHIGAN,  PENNSYLVANIA 

Alabama.  On  February  i,  1915,  Alabama  provided  for 
the  appointment  of  a  Joint  Committee  of  the  two  houses  to 
investigate  and  report  upon  all  matters  relating  to  the  raising 
of  revenue  and  expenditure  of  funds  for  the  operation  of  the 
government.1  Among  the  recommendations  of  this  commit- 
tee was  one  that  the  Governor  lay  before  each  session  of  the 
legislature  a  budget  giving  the  estimates  of  revenues  and  ex- 
penditures for  the  period  to  be  financed.2 

Arizona.  The  civil  code  of  Arizona  imposes  upon  the 
auditor  the  duty  of  compiling  and  submitting  to  the  legislature 
a  consolidated  statement,  which  is  designated  a  budget,  of  all 
estimates  of  expenditures,  and  also  to  prepare  for  use  by  the 
legislature  a  dummy  appropriation  bill.3 

An  Act  prescribing  the  powers  and  duties  of  the  State  Aud- 
itor. [Revised  Statutes  of  Arizona,  1913.  Civil  Code, 
Title  I,  Chapter  VIII.  ] 

Par.  88.  In  addition  to  all  other  duties  required  of  the 
state  auditor  by  law,  he  shall,  biennially,  before  the  conven- 
ing of  the  regular  session  of  the  state  legislature  in  each  bi- 
ennial period,  prepare  for  the  use  and  benefit  of  such  legisla- 
ture, a  budget ;  which  said  budget  shall  contain  the  following 
matter,  viz. : 

(a)     A  list  of  all  regular  annual  appropriations,  with  a  ref- 

1  Joint  Resolution  for  the  Appointment  of  a  Special  Committee  on 
Finance  and  Taxation,  February  I,  1915.    Acts  of  1915,  No.  12. 

2  Report  of  Committee,  July  13,  1915,  p.  7. 

"Revised  Statutes  of  Arizona,  1913,  Civil  Code,  Chapter  XIII. 


BUDGETARY  LEGISLATION 

erence  in  each  instance  to  the  part  of  the  statutes  or  session 
laws  making  the  appropriations. 

(b)  A  list  of  all  special  appropriations  with  a  reference 
in  each  instance  to  the  part  of  the  statutes  or  session  laws 
making  the  appropriation. 

(c)  A  list  of  all  appropriations  required  or  requested  for 
the  maintenance  of  the  departments  of  state  government,  with 
reference  in  each  instance  to  a  page  in  an  addendum  to  said 
budget  where  explanations  or  itemizations,  or  both  when  pos- 
sible, of  said  items  may  be  found. 

(d)  A  list  of  all  appropriations  required  or  requested  for 
the  maintenance  of  various  state  institutions,  with  reference 
in  each  instance  to  a  page  in  an  addendum  to  said  budget 
where  explanations,  or  itemizations,  or  both  when  possible, 
of  said  items  may  be  found. 

(e)  A  list  of  all  appropriations  required  or  requested  for 
improvements  in  the  various  state  institutions,  with  reference 
in  each  instance  to  a  page  in  an  addendum  to  said  budget 
where  explanations,  or  itemizations,  or  both  when  possible, 
of  said  items  may  be  found. 

Par.  89.  Said  budget  shall  also  contain  a  table  showing  all 
appropriations  separately  in  items  and  in  separate  columns  by 
years,  for  the  last  five  biennial  periods,  together  with  a  column 
for  the  appropriations  required  or  requested  for  the  biennial 
period  to  be  provided  for  by  the  legislature  for  whom  the 
budget  is  prepared,  and  columns  for  estimated  balances  or 
deficits  that  will  be  in  each  fund  at  the  close  of  the  fiscal  year 
ending  after  the  session  of  the  legislature  for  which  the  table 
is  prepared. 

Par.  90.  The  state  auditor  shall  also  prepare,  in  conjunc- 
tion with  the  attorney  general,  a  form  of  a  general  appropri- 
ation bill  for  the  use  of  each  legislature  and  before  its  con- 
vening in  regular  session.  Said  form  shall  be  blank  only  in 
the  amounts  to  be  inserted  therein,  and  shall  contain  a  blank 
space  for  the  insertion  of  every  general  item  requested  of  the 
legislature  by  all  state  departments  and  all  state  institutions. 

Par.  91.  An  addendum  shall  be  prepared  to  the  budget 
herein  required  to  be  prepared,  which  said  addendum  shall 
contain  a  full  itemization  wherever  possible  of  each  general 
item  in  the  budget  and  a  full  explanation  of  the  use  and  need 
of  each  item  wherever  possible. 

Par.  92.     The  state  auditor  is  hereby  empowered  to  request 

169 


BUDGETARY  REFORM  IN  THE  STATES 

of,  and  receive  of  each  department  of  the  state  government, 
and  each  state  institution,  such  information  as  he  may  require 
to  prepare  the  budget  required  of  him  herein,  and  each  de- 
partment of  the  state  government  and  all  state  institutions 
are  hereby  required  to  furnish  said  information  to  the  state 
auditor  upon  his  request  therefor. 

Arkansas.  By  an  act,  approved  February  12,  1913,  Arkan- 
sas made  provision  for  the  preparation  by  the  state  auditor 
of  a  budget  that  should  contain  estimates  both  of  revenues  and 
expenditures  and  for  the  creation  of  a  Joint  Budget  Com- 
mittee of  the  two  houses  that  should  have  the  preparation  and 
introduction  of  all  appropriation  bills  "for  the  necessary  run- 
ning expenses  of  the  State  Government,  including  all  the 
State's  institutions  provided  for  under  existing  laws."  The 
act  further  provides  that,  "They  (the  Joint  Committee)  shall 
also  make  recommendations,  by  bill  or  otherwise,  for  such 
changes  in  the  State's  revenue  laws  as  they  may  deem  neces- 
sary to  raise  sufficient  funds  for  the  State's  needs."  Fol- 
lowing is  a  copy  of  this  act. 

An  Act  to  expedite  the  passage  of  the  appropriation  bills  for 
the  running  expenses  of  the  State  Government.  Approved 
February  12,  1913.  (Acts  of  1913,  Act  44.) 

Section  i.  It  shall  be  the  duty  of  the  heads  of  the  various 
departments  of  the  Executive  and  Judicial  branches  of  the 
State  Government,  on  or  before  the  date  for  the  convening  of 
each  biennial  session  of  the  Legislature,  to  file  with  the  State 
Auditor  a  compiled  statement  of  the  necessary  running  ex- 
penses of  their  respective  departments  for  the  ensuing  biennial 
period;  including  an  estimate  of  incidental  expenses,  and  giv- 
ing an  itemized  statement  of  any  proposed  extension  of  duties 
connected  therewith  and  the  cost  thereof. 

Sec.  2.  It  shall  also  be  the  duty  of  the  various  Boards  hav- 
ing the  management  of  the  several  institutions  of  the  State, 
penal,  educational  and  eleemosynary,  to  furnish  a  compiled 
estimate,  in  itemized  form,  of  the  necessary  running  expenses 
for  the  ensuing  biennial  period,  of  the  several  institutions,  and 
file  same  with  the  State  Auditor,  as  provided  in  section  i  of 
this  Act.  Said  compiled  statement  shall  include  the  estimated 

170 


BUDGETARY  LEGISLATION 

costs  of  all  new  buildings,  repairs  on  old  buildings,  and  all 
other  proposed  equipment,  improvement  or  extensions  pro- 
posed. 

Sec.  3.  It  shall  be  the  duty  of  the  State  Auditor  to  com- 
pile an  estimate  of  all  the  State's  revenues,  to  be  derived  from 
all  sources,  for  the  ensuing  biennial  period,  basing  his  esti- 
mate on  the  income  for  the  preceding  two  years. 

Sec.  4.  Upon  the  convening  of  the  General  Assembly  at 
each  biennial  session,  it  shall  be  the  duty  of  the  Speaker  of 
the  House  of  Representatives  to  appoint  seven  members  of 
that  body  and  the  President  of  the  Senate  to  appoint  five  mem- 
bers of  that  body,  who  shall  constitute  a  joint  Budget  Com- 
mittee of  twelve.  Said  appointments  to  be  made  not  later 
than  five  days  after  the  organization  of  the  General  Assem- 
bly. Said  committee  is  hereby  allowed  the  services  of  a  clerk 
for  such  time  as  they  may  deem  necessary  who  must  be  an 
expert  stenographer,  who  shall  be  paid  five  ($5.00)  dollars  per 
day. 

Sec.  5.  Immediately  upon  the  appointment  of  such  Budget 
Committee,  the  State  Auditor  shall  furnish  to  them  an  esti- 
mate of  the  running  expense  of  the  State  Government  as  pro- 
vided in  sections  i  and  2  of  this  Act.  Also  an  estimate  of  the 
revenue  as  provided  in  section  3. 

Sec.  6.  It  shall  be  the  duty  of  the  said  Budget  Com- 
mittee, as  soon  as  practicable  and  not  later  than  twenty 
days  after  their  appointment,  to  prepare  and  introduce  into 
the  General  Assembly  all  the  appropriation  bills  for  the  nec- 
essary running  expenses  of  the  State  Government,  including 
all  the  State's  institutions,  provided  for  under  existing  laws. 
They  shall  also  make  recommendations,  by  bill  or  otherwise, 
such  changes  in  the  State's  revenue  laws  as  they  may  deem 
necessary  to  raise  sufficient  funds  for  the  State's  needs. 

Sec.  7.  The  failure  or  refusal  to  perform  the  duties  as  pro- 
vided in  this  Act  shall  be  deemed  a  non-feasance  in  office ;  and 
the  person  found  guilty  of  such  failure  or  refusal  shall  be 
liable  to  a  fine  of  not  less  than  ten  ($10.00)  dollars  nor  more 
than  one  hundred  ($100.00)  dollars. 

Sec.  8.  All  laws  and  parts  of  laws  in  conflict  herewith 
are  hereby  repealed ;  and  this  Act  shall  take  effect  and  be  in 
force  from  and  after  its  passage. 

Colorado.     Colorado  has  taken  no  direct  action  for  the 

171 


BUDGETARY  REFORM  IN  THE  STATES 

introduction  of  a  budgetary  system.  Its  Survey  Committee 
of  State  Affairs,  created  in  1915  *•  however,  has  issued  a 
preliminary  report  in  which  it  has  set  forth  with  exceptional 
clearness  the  defects  of  the  existing  system  of  administering 
the  finances  of  the  state  and  recommending  in  the  strongest 
way  possible  the  introduction  of  a  budgetary  system  resting 
upon  a  scientific  system  of  accounting  as  the  only  means  of 
putting  the  administration  of  the  finances  of  the  state  upon 
a  proper  basis.  This  report 2  is  so  well  expressed,  shows  the 
failings  of  existing  practices,  not  only  in  Colorado  but  in 
practically  all  states  which  have  not  gone  upon  a  budgetary 
basis,  so  convincingly  and  points  out  so  clearly  that  in  a  proper 
system  of  accounts  and  the  use  of  a  budget  alone  lies  salvation, 
that  we  feel  justified  in  reproducing  in  our  appendix  almost  in 
extenso  its  summary  of  findings  and  recommendations  in  so 
far  as  they  relate  to  this  matter  of  the  administration  of  the 
state's  finances. 

The  report  contains  many  other  recommendations  dealing 
with  changes  which  should  be  made  in  the  system  of  accounts, 
the  changes  in  the  date  of  the  fiscal  year  and  the  establishment 
of  the  Governor  as  the  head  of  the  administration,  etc.,  which, 
though  of  great  importance,  it  would  be  out  of  place  here  to 
reproduce. 

Though  positive  action  in  the  way  of  amending  the  consti- 
tution or  enacting  legislation  is  yet  to  be  taken,  it  cannot  but 
be  counted  a  great  gain  to  have  the  elements  of  the  problem 
and  the  means  of  reform  so  clearly  stated. 

Florida.  Florida,  like  Michigan,  has  provided  for  the  es- 
tablishment of  a  body  which  shall  have  the  express  duty  of 

1  Session  Laws  1915,  Chapter  161. 

*  Summary  of  Findings  and  Recommendations  relating  to  the 
Executive  Branch  of  the  State  Government  of  Colorado  as  submitted 
to  the  Survey  Committee  of  State  Affairs  by  Its  Staff.  Published 
and  circulated  by  the  committee  for  purposes  of  discussion  and  criti- 
cism preliminary  to  the  submission  of  the  report  of  the  committee 
giving  its  recommendations.  December,  1916. 

172 


BUDGETARY  LEGISLATION 

reporting  upon  the  advisability  of  the  introduction  of  a  budget 
system.1  In  this  case  the  action  has  taken  the  form  of  the 
creation  of  a  joint  committee  of  the  two  houses  to  perform 
this  duty.  Section  4  of  the  Resolution  providing  for  its 
creation  directs: 

That  the  committee  shall  also  investigate  and  make  recom- 
mendations concerning  any  needful  changes  for  placing  the 
appropriations  and  expenditures  of  state  funds  nearer  on  a 
complete  budget  basis  or  system. 

Michigan.  Though  Michigan  has  passed  no  law  providing 
for  the  establishment  of  a  budget  system,  its  legislature  has 
placed  itself  squarely  on  record  as  favoring  such  a  system  by 
the  passage  of  an  act,  May  10,  1917,  providing  for  the  estab- 
lishment of  a  body,  to  be  known  as  the  Michigan  Budget  Com- 
mission of  Inquiry,  to  which  is  given  the  express  mandate  "to 
examine  the  budget  laws  of  other  states,  their  operation  and 
the  results  obtained  and  to  gather  and  compile  all  the  informa- 
tion necessary  to  enable  it  to  formulate  an  adequate  and  com- 
prehensive budget  system  for  the  State."  2 

Pennsylvania.  Budgetary  reform  in  Pennsylvania  has  as 
yet  only  reached  the  stage  where  preliminary  proposals  are 
being  put  forth  that  the  Governor  be  given  the  duty  of  sub- 
mitting to  the  legislature  a  consolidated  statement  of  the  ex- 
penditure needs  of  the  several  services  of  the  government. 
In  fact  the  only  concrete  suggestion  of  this  character  of  which 
track  could  be  obtained  was  that  made  by  the  solicitor  of  the 
Economy  and  Efficiency  Commission  in  a  report  submitted  to 
that  commission  under  date  of  March  28,  1917.  In  this  re- 
port the  solicitor  points  out  many  features  in  respect  to  which 

1  House  Concurrent  Resolution,  April  21,  1917,  Acts  of  1917,  p.  339. 

a  An  act  to  create  a  Commission  of  Inquiry  to  investigate  and  report 
upon  the  general  financial  system  of  the  state,  and  investigate,  report 
upon  and  recommend  legislation  necessary  to  establish  a  budget  sys- 
tem. Approved  May  10,  1917.  Acts  of  1917,  No.  193. 

173 


BUDGETARY  REFORM  IN  THE  STATES 

the  existing  organization  and  methods  of  business  of  the  gov- 
ernment are  defective,  and  makes  recommendations  as  to  the 
action  required  to  remove  these  defects.  Among  these  recom- 
mendations is  one  that  a  single  State  Board  of  Finance  and 
Revenue  be  created  to  take  over  the  duties  now  performed  by 
four  separate  boards,  the  Board  of  Public  Accounts,  Board 
of  Revenue  Commissioners,  Sinking  Fund  Commission,  and 
Board  to  License  Private  Bankers,  and  to  have  in  addition  the 
further  duty  of  preparing  and  submitting  to  the  Governor  not 
later  than  January  i  of  each  odd-numbered  year  a  report  show- 
ing :  ( i )  the  amounts  appropriated  and  the  purposes  for  which 
they  were  intended;  (2)  the  amounts  expended  from  appro- 
priations made  by  the  previous  legislature  during  the  first 
eighteen  months  of  the  biennium;  and  (3)  the  estimated  needs 
of  the  government  during  the  next  biennium.  To  this  is 
added  the  recommendation  that  the  board  should  confer  with 
the  Governor  and  add  to  its  report  the  latter 's  recommenda- 
tions as  to  the  appropriations  that  should  be  granted. 

Though  this  is  a  step  in  the  right  direction,  it  is  evidently 
but  a  short  one.  There  is  in  it  little  appreciation  of  the  real 
character  and  function  of  a  proper  budgetary  system  or  of 
the  character  of  budgetary  organs  that  should  be  provided 
for  the  administration  of  such  a  system.  The  main  value 
of  this  recommendation  is,  therefore,  that  of  bringing  before 
the  legislature  the  importance  of  the  question  of  budgetary 
reform. 


CHAPTER  X 

COMPARATIVE  ANALYSIS  OF  BUDGETARY  LEGIS- 
LATION OF  THE  STATES:  FORMULATION  OF 
THE  BUDGET 

Having  considered  separately  the  action  of  each  state  for 
the  establishment  of  a  budgetary  system,  it  will  be  of  interest 
now  to  consider  this  action  as  a  whole,  and,  by  a  comparative 
study,  seek  to  make  known  the  extent  to  which  the  several 
states  have  made  provision  for  all  the  steps  that  must  be  taken 
if  a  thoroughly  satisfactory  budgetary  system  is  to  be  estab- 
lished. 

Adoption  of  Principle  of  a  Consolidated  Statement  of 
Estimates.  In  our  consideration  of  the  nature  and  function 
of  a  budget 1  we  have  sought  to  set  out  in  detail  the  character 
that  such  a  document  should  have  if  it  is  to  correspond  to 
the  modern  conception  of  a  scientific  budget.  It  would  be  a 
mistake,  however,  to  say  that  a  state  had  not  adopted  a 
budgetary  system  unless  it  made  use  of  a  document  of  this 
character.  In  its  simplest  terms  a  budget  may  be  deemed  to 
be  but  a  consolidated  statement  of  the  estimated  revenue  and 
expenditure  needs  of  a  government  for  a  fixed  period.  Mani- 
festly the  adoption  of  a  system  under  which  all  such  estimates 
get  before  the  legislature  in  a  single  consolidated  form  not 
only  is  a  great  improvement  over  the  system  which  formerly 
prevailed  almost  universally  in  the  states  where  each  service 
or  institution  receiving  aid  from  the  public  treasury  sent  in 
its  request  for  funds  independently,!  but  is  the  first -step -at 
least  towards  the  adoption  of  a  budgetary  system  that  will 
conform  to  all  desirable  requirements  of  such  a  system. 

^he  Problem  of  a  National  Budget:  Studies  in  Administration. 
Institute  for  Government  Research,  1918. 

175 


BUDGETARY  REFORM  IN  THE  STATES 

If  now  we  pass  in  review  the  action  of  the  states  looking  to 
the  adoption  of  a  budgetary  system,  as  described  above,  it  will 
>/  be  found  that  no  less  than  twenty-five  states l  have  taken  this 
fundamental  primary  step.  These  states  include  only  those 
which  acted  within  recent  years  with  the  deliberate  end  in 
view  of  adopting  a  budgetary  system.  There  are  undoubtedly 
other  states  which  have  in  the  past  provided  that  estimates  of 
expenditures  shall  be  compiled  by  the  state  auditor  or  other 
officer.  In  four  other  states  2  commissions  or  committees  of 
inquiry  have  reported  recommending  strongly  the  establish- 
ment of  a  budget  system;  in  two  others  3  committees  or  com- 
missions have  been  created  to  report  on  the  matter,  while  in 
at  least  six  others  4  the  Governors  in  their  annual  messages 
of  1917  either  recommended  that  the  administration  of  the 
financial  affairs  of  their  states  be  put  upon  a  budgetary  basis 
or  that  committees  be  appointed  to  determine  what  steps 
should  be  taken  in  that  direction.  It  is  thus  not  going  too  far 
to  state  that  in  practically  every  state  of  the  Union  this  mat- 
ter of  budgetary  systems  is  receiving  serious  consideration 
and  that  in  over  half  of  them  important  action  has  already 
been  had. 

Departmental  Estimates  Submitted  with  Recommenda- 
tions of  Reviewing  Authority.  In  the  preceding  section  we 
have  sought  to  make  known  merely  the  extent  to  which  the 

1  These  states  listed  in  the  order  in  which  the  action  was  taken  are 
as  follows: 

Calif.  1911;    Mass.  1912;    Ariz.  1913;     Conn.    1915;  La.     1916;    Del.    1917 

Wis.     1911;                             Ark.    1913;    la.         1915;  Md.    1916;    111.      1917 

Oreg.  1913;    Minn.   1915;  N.  J.  1916;     Kans.  1917 

Neb.     1915;  N.Y.i9i6;    N.M.  1917 

N.  D.   1915;  Tenn.  1917 

Ohio    1915;  S.  D.  1917 

Wash.  1915;  Utah  1917 

Va.      1918 

2 Ala.;  Colo.;  Pa.;  Va. 
8Fla.;  Mich. 
4 Colo.;  N.  H.;  Rhd.  Is.;  S.  C;  W.  Va.;  Wy. 

I76 


FORMULATION  OF  THE  BUDGET 

states  have  made  provision  for  estimates  of  expenditure  to 
go  forward  in  compiled  form.  The  next  step  in  the  develop- 
ment of  a  budgetary  system  is  that  of  providing  that  the 
authority  to  which  is  entrusted  the  work  of  making  the  com- 
pilation, or  some  other  authority,  shall  subject  these  estimates 
to  examination  and  submit  its  recommendations  regarding 
the  extent  to  which  the  requests  for  funds  represented  by  the 
estimates  shall  be  granted. 

The  theory  on  which  the  establishment  of  a  provision  of 
this  kind  rests  is  that  it  is  desirable  that  departmental  esti- 
mates shall  be  passed  upon  by  some  authority  which  represents 
the  government  as  a  whole.  As  has  elsewhere  been  pointed 
out  applicants  for  funds  occupy  a  position  antagonistic  to  the 
interests  of  the  general  treasury.  They  are  seeking  to  get  all 
the  money  they  can  and  only  in  an  indirect  way  are  concerned 
with  keeping  down  aggregate  expenditures.  It  is  true  that 
the  legislature  itself  has  the  function  of  representing  the 
general  welfare  and  the  duty  of  protecting  the  general 
treasury.  That  body,  however,  is  not  in  immediate  touch 
with  the  current  administration  of  affairs  and  for  obvious 
reasons  is  not  in  a  position  to  make  a  minute  and  unbiased 
examination  of  government  needs.  Though  the  final  say  rests 
with  it,  it  nevertheless  needs  the  advice  of  some  independent 
organ  which  is  better  situated  than  it  is  to  examine  into  re- 
quests as  formulated  by  the  spending  services. 

This  function  of  review  and  recommendation  can  be  per- 
formed in  two  ways :  by  the  reviewing  authority  transmitting 
the  estimates  as  received  by  it  with  its  recommendations  re- 
garding the  extent  to  which  they  should  be  acted  upon  favor- 
ably; and  by  the  reviewing  authority  looking  upon  the  esti- 
mates as  formulated  by  the  spending  departments  as  merely 
data  on  the  basis  of  which  it  can  itself  prepare  estimates  of 
expenditure  needs  to  be  forwarded  to  the  legislature  as  a 
budget. 

Of  the  twenty-five  states  which  we  have  enumerated  as 
providing  for  the  submission  of  the  estimates  in  compiled  form 

177 


BUDGETARY  REFORM  IN  THE  STATES 

all  but  two  *  provide  that  the  compiling  authority  shall  make 
known  its  opinion  regarding  what  grant  of  funds  shall  be 
made  in  one  or  the  other  of  these  two  ways.  Of  these  twenty- 
three  states  five,  Connecticut,  Louisiana,  Massachusetts,  Ore- 
gon and  Washington,  apparently  provide  that  the  original 
estimates  as  prepared  by  the  spending  departments  and  insti- 
tutions shall  be  forwarded  to  the  legislature  but  shall  be  ac- 
companied by  the  recommendations  of  the  compiling  and 
reviewing  authority  as  to  the  extent  to  which  such  requests 
shall  be  granted. 

In  Connecticut  the  compiling,  reviewing  and  recommend- 
ing authority  is  the  State  Board  of  Finance,  a  body  composed 
of  the  state  treasurer,  state  comptroller,  and  state  tax  com- 
missioner and  three  other  members  appointed  by  the  Governor. 
In  Louisiana  this  authority  is  a  body  known  as  the  Board  of 
State  Affairs  composed  of  three  members  appointed  from 
private  life  by  the  Governor  with  the  approval  of  the  senate. 
This  board  is  in  effect  a  permanent  commission  on  economy 
and  efficiency  since,  in  addition  to  reviewing  and  transmitting 
the  estimates,  as  above  described,  it  also  has  the  duty  of 
making  investigations  into,  and  submitting  recommendations 
regarding,  the  conduct  of  public  affairs  by  the  several  depart- 
ments and  institutions  of  the  state  besides  performing  certain 
other  duties  in  respect  to  the  assessment  and  taxation  of 
property  that  need  not  be  described  here. 

In  Massachusetts  the  budget  compiling  and  recommending 
authority  is  the  state  supervisor,  the  successor  of  the  late 
Commission  on  Economy  and  Efficiency  and  having  all,  or 
practically  all,  of  the  former  duties  of  that  body.  In  Oregon 
the  compiling  authority  is  the  secretary  of  state  and  the  trans- 
mitting and  recommending  authority  the  Governor.  In  Wash- 
ington the  compiling  authority  is  the  state  auditor,  and  the 

1  These  two  states  are  Arizona  and  Arkansas.  In  both  of  these 
cases  the  compiling  officer  is  the  state  auditor  and  the  acts  imposing 
the  duty  bear  date  of  1913,  thus  antedating  the  modern  movement  for 
budgetary  reform. 

178 


FORMULATION  OF  THE  BUDGET 

reviewing  and  recommending  body  the  State  Board  of  Fi- 
nance, a  body  composed  of  the  Governor,  the  state  auditor  and 
the  state  treasurer,  which  was  originally  created  to  attend  to 
certain  financial  matters  such  as  the  investment  of  public 

funds.  !  5  ';%;v;i 

Formulation  of  Budget  by  a  Legislative  Committee. 
From  a  consideration  of  the  provision  that  has  been  made  for 
the  sending  forward  of  the  original  estimates  with  recom- 
mendations by  some  reviewing  authority,  we  now  pass  to 
that  of  the  more  advanced  policy  of  entrusting  to  some  central 
organ  the  affirmative  duty  of  formulating  a  budget  represent- 
ing its  opinion  as  to  the  provision  that  should  be  made  for 
the  financing  of  the  government  during  the  period  to  be  pro- 
vided for.  Eighteen  states,  as  stated,  have  taken  this  defi- 
nite action.  These  states,  however,  have  pursued  a  widely 
diverse  policy  in  respect  to  the  character  of  the  organ  to 
which  this  important  duty  shall  be  entrusted. 

In  one  state,  New  York,  the  budget  framing  organ  has 
been  made  the  Finance  Committee  of  the  Senate  and  the 
Ways  and  Means  Committee  of  the  Assembly  acting  jointly 
or  separately.  It  is  true  that  provision  is  made  that  the 
Governor  may  if  he  desires  submit  his  recommendations  re- 
garding the  total  sum  to  be  granted  the  several  services,  but 
the  budget  itself  in  its  details  is  to  be  framed  by  the  com- 
mittees of  the  legislature  above  named.  As  has  been  pointed 
out  in  our  consideration  of  this  act,  this  provision  makes  no 
real  advance  towards  the  establishment  of  the  fundamental 
principle  of  a  correct  budgetary  system;  that,  namely,  of  se- 
curing from  the  responsible  head  of  the  administration  a 
clear-cut  and  comprehensive  financial  report  and  work  pro- 
gram. At  best  it  means  merely  that  the  legislature  will  be  in 
a  position  to  consider  the  financial  needs  of  the  government 
as  a  whole  instead  of  those  of  the  services  individually  as 
prevailed  in  the  past. 

Formulation  of  Budget  by  a  Joint  Legislative-Adminis- 
trative Committee,  Four  states,  North  Dakota,  South  Da- 

179 


BUDGETARY  REFORM  IN  THE  STATES 

kota,  Vermont  and  Wisconsin,  have  adopted  the  system  of 
having  the  budget  formulated  by  a  special  body  composed 
partly  of  representatives  of  the  legislature  and  partly  of  rep- 
resentatives of  the  administrative  branches  of  the  government. 

Wisconsin  was  the  first  of  these  states  to  take  action  in 
this  way.  In  1911  it  passed  an  act  establishing  what  was 
known  as  a  Board  of  Public  Affairs,  consisting  of  the  Gover- 
nor as  chairman,  the  chairman  of  the  financial  committees  of 
the  two  houses  and  two  other  members  appointed  by  the  Gov- 
ernor, one  of  whose  duties  was  that  of  compiling  the  esti- 
mates. Subsequent  legislation  has  changed  somewhat  the 
composition  of  this  body  and  greatly  enlarged  its  powers. 
As  at  present  constituted  it  has  as  members  the  Governor, 
secretary  of  state,  president  pro  tern,  of  the  senate,  speaker  of 
the  assembly,  chairman  of  the  senate  finance  committee,  chair- 
man of  the  assembly  finance  committee  and  three  other  persons 
appointed  by  the  Governor  and  approved  by  the  senate.  The 
powers  of  this  board  now  embrace  not  only  the  duty  of  com- 
piling the  estimates  but  of  formulating  the  budget  in  the  sense 
that  its  provisions  represent  the  opinion  of  the  board  as  to 
what  action  should  be  taken.  The  board  also  has  other  im- 
portant powers  which  will  be  elsewhere  considered.  l 

The  South  Dakota  act  is  almost  a  literal  copy  of  that  of 
North  Dakota,  and  the  Vermont  act,  though  differently 
worded,  is  based  upon  substantially  the  same  principles.  All 
three  acts  provide  for  the  formulation  of  a  budget  by  a 
permanent  body,  known  as  a  State  Budget  Board,  in  the  case 
of  the  two  Dakotas,  and  a  Committee  on  Budget  in  the  case 
of  Vermont,  composed  of  the  chairmen  of  the  financial  com- 
mittees of  the  two  houses,  the  Governor  and  certain  adminis- 
trative officers.  These  bodies  have  adequate  power  to  secure 
from  administrative  services  reports,  financial  statements  and 
estimates  in  the  form  desired  by  them  and  to  employ  technical 

1  See  section  of  this  chapter  on  "Establishment  of  an  Integrated 
Administrative  System,"  pp.  183-187. 

180 


FORMULATION  OF  THE  BUDGET 

and  other  assistance  needed  by  them  for  the  performance  of 
their  work. 

It  will  be  remarked  that  in  all  four  of  these  cases  the  Gov- 
ernor is  a  member  and  the  chairman  of  the  board  or  com- 
mittee. Though  the  principle  of  having  the  budget  represent 
a  financial  and  work  program  emanating  from  a  responsible 
chief  executive  is  not  carried  into  effect  by  these  acts,  oppor- 
tunity nevertheless  is  given  to  the  Governor  through  his  posi- 
tion on  this  body  to  bring  forward  and  press  his  own  admin- 
istrative and  work  program.  The  creation  of  these  bodies 
is  also  of  significance  as  representing  the  effort  to  bring  the 
legislative  and  executive  branches  of  the  government  into 
closer  working  relations  with  one  another  than  has  been  the 
case  in  the  past. 

Formulation  of  Budget  by  an  Administrative  Board. 
In  two  states,  California  and  Tennessee,  the  duty  of  formu- 
lating and  transmitting  to  the  legislature  a  budget  has  been 
entrusted  to  a  special  board  composed  of  officers  belonging  to 
the  administrative  branch  of  the  government. 

The  California  board  is  known  as  the  State  Board  of  Con- 
trol and  is  composed  of  three  members  appointed  by  the  Gov- 
ernor. This  board,  as  has  been  stated,  is  in  many  respects  a 
remarkably  interesting  body.  It  constitutes  the  nearest  ap- 
proach to  a  general  bureau  of  administration  possessed  by  any 
state,  and  as  such  will  receive  special  attention  when  con- 
sideration is  had  of  the  extent  to  which  the  states  have  ap- 
preciated the  necessity  for  bringing  into  existence  a  special 
organ  to  have  charge  of  the  administration  of  budgetary 
affairs. 

In  Tennessee  the  budget  framing  organ  is  the  State  Budget 
Commission,  a  body  composed  of  the  Governor,  the  comp- 
troller, the  treasurer,  the  secretary  of  state  and  the  auditor. 
This  body  has  powers  of  investigation  into  the  manner  in 
which  affairs  are  conducted  by  the  several  services  and  in- 
stitutions of  the  state  similar  to  those  possessed  by  the  Cali- 
fornia board.  It  does  not  appear,  however,  that  it  has  the 

181 


BUDGETARY  REFORM  IN  THE  STATES 

power  to  issue  orders  directing  what  accounts  shall  be  kept 
and  how  administrative  affairs  shall  be  conducted  that  is  pos- 
sessed by  the  latter  body.  From  the  standpoint  of  budget 
framing  it,  however,  must  be  deemed  to  have  a  status  and 
composition  superior  to  the  California  board,  since  it  is  com- 
posed of  administrative  officers  of  the  government  and  has  as 
a  member  and  its  chairman  the  Governor  himself.  The  Cali- 
fornia board  stands  as  it  were  outside  of  the  administration. 
The  Tennessee  commission  is  an  integral  part  of  the  adminis- 
tration and  its  budget  thus  has  more  the  character  of  an 
administrative  program  brought  forward  by  the  Governor 
and  his  chief  associates  than  does  the  California  budget  ex- 
cept as  the  Governor  of  that  state  adopts  the  board's  budget 
as  his  own. 

Formulation  of  Budget  by  the  Governor.  Throughout 
this  volume  we  have  had  constant  occasion  to  state  that  the 
Governor  is  the  authority  upon  whom  should  be  placed  the 
responsibility  for  formulating  the  budget.  In  doing  so  we 
have  at  the  same  time  emphasized  the  necessity  for  the  crea- 
tion of  a  special  budgetary  organ  similar  to  the  boards  which 
we  have  just  been  considering,  but  our  position  has  been  that 
these  bodies  should  have  the  status  of  agencies  through  which 
the  Governor  may  act  in  discharging  his  duties  in  respect  to 
the  framing  of  the  budget  and  in  exercising  his  powers  as 
head  of  the  administration  generally  rather  than  that  they 
should  have  an  independent  status  and  original  powers. 

It  is  a  matter  of  congratulation,  therefore,  that  a.  large 
proportion  of  the  states  which  acted  at  all  have  recognized 
this  principle  and  have  definitely  provided  that  responsibility 
for  the  framing  and  presentation  of  a  budget  shall  reside  in 
the  hands  of  the  Governor.  Following  are  the  states  which 
I  have  adopted  this  policy:  Delaware,  Illinois,  Iowa,  Kansas, 
Maryland,  Minnesota,  Nebraska,  New  Jersey,  New  Mexico, 
Ohio  and  Utah.  It  is  of  interest  to  note  that  the  legislation 
providing  for  this  system  is  of  recent  date,  none  antedating 
1915,  thus  showing  that  the  modern  view  regarding  budgetary 

182 


FORMULATION  OF  THE  BUDGET 

reform  recognizes  this  important  principle.  Of  these  states 
one,  Maryland,  has  accomplished  the  reform  through  the  proc- 
ess of  constitutional  amendment. 

Establishment  of  an  Integrated  Administrative  System. 
Another  point  upon  which  great  emphasis  has  been  laid  is 
that  a  thoroughly  satisfactory  budgetary  system  can  not  be 
established  that  does  not  rest  upon  an  integrated  administra- 
tive system.  This  system  is  one  where  the  several  administra- 
tive services  and  institutions  are  grouped  according  to  their 
character  into  departments,  all  of  which  are  under  the  gen- 
eral direction,  supervision  and  control  of  the  Governor.  The 
system  carries  with  it  the  requirement  that  the  heads  of  these 
departments  shall  hold  their  offices  by  appointment  by  the 
Governor  and  shall  be  subject  to  removal  by  him  and  that 
the  line  of  administrative  authority  shall  thus  run  through 
the  Governor  to  the  legislature  instead  of  directly  to  that  body. 
The  system  in  a  word  is  that  which  obtains  in  the  national 
government.  Under  this  system  the  chief  executive  is  not 
only  a  part  of  the  administration  but  its  real  responsible  head/ 

Probably  the  greatest  single  obstacle  in  the  way  of  budg- 
etary reform  in  the  states  consists  in  the  fact  that  the  admin- 
istrative systems  of  our  states  have  been  established  upon  a 
contrary  principle.  The  Governor,  though  designated  as  chief 
executive,  has  been  given  a  position,  as  it  were,  outside  of 
the  administration.  He  has  been  given  little  or  no  direct 
authority  over  the  conduct  of  affairs  in  the  several  state  in- 
stitutions. Only  in  exceptional  cases  has  he  been  given  the 
appointment  of  the  heads  of  important  administrative  services. 
For  the  most  part  these  officers  hold  office  through  election 
by  the  people  or  by  appointment  by  the  legislature.  In  gen- 
eral the  principle  followed  has  been  that  the  line  of  authority 
and  responsibility  runs  direct  to  the  people  or  the  legislature.1 


an  excellent  consideration  of  the  administrative  powers 
Governors  at  the  present  time,  see  Principles  of  American  State*** 
Administration,  by  J.  B.  Mathews,  D.  Appleton  and  Co.,  New  York, 
1917- 

I83 


BUDGETARY  REFORM  IN  THE  STATES 

Under  these  conditions  it  is  evidently  exceedingly  difficult, 
if  not  impossible,  for  a  Governor,  even  though  he  may  be 
directed  by  statute  to  formulate  and  submit  to  the  legisla- 
ture a  budget,  to  prepare  such  a  document  that  will  have  the 
character  or  carry  with  it  the  weight  that  it  should.  Such 
a  document  will  not  be  a  financial  and  work  program  ema- 
nating from  a  responsible  administrator  in  chief.  At  best  it 
will  be  but  a  compilation  and  revision  of  programs  prepared 
by  others  made  by  an  officer  standing  outside  of  the  field  of 
administration  generally  and  not  directly  in  control  of,  or 
responsible  for,  the  manner  in  which  administrative  affairs 
are  conducted. 

Though  this  is  the  condition  which  has  obtained  almost 
universally  in  the  states  in  the  past  it  is  encouraging  that  the 
failure  of  this  system  to  secure  an  efficient  administration 
of  public  affairs  is  being  more  and  more  recognized  and  that 
steady  progress  has  been  made  towards  the  establishment  of  the 
contrary  principle  of  vesting  superior  administrative  powers 
in  the  Governor  and  of  bringing  into  existence  a  more  inte- 
grated system  of  administration. 

Action  in  this  direction  has  taken  a  number  of  forms.  In 
the  first  place,  just  as  in  the  national  government  there  has 
been  an  increasing  tendency,  apart  from  any  specific  constitu- 
tional or  legislative  enactment,  to  look  upon  the  President 
as  the  head  of  the  administration,  so  in  the  states  there  has 
been  a  tendency  to  view  the  Governor  in  the  same  light.  Sec- 
ondly, this  tendency  has  found  expression,  in  part,  in  the  aug- 
mentation of  the  power  of  appointment  of  the  Governor. 
This  tendency  has  been  powerfully  promoted  by  the  strong 
movement  for  the  short  ballot.1 

1  For  a  brief  but  excellent  statement  of  the  present  condition  of  the 
short  ballot  movement  see  The  Short  Ballot,  Bulletin  No.  16,  com- 
mission to  compile  information  and  data  for  the  use  of  the  (Massa- 
chusetts) Constitutional  Convention,  Boston,  1917.  New  Jersey  and 
Illinois  are  the  only  states  having  a  real  short  ballot  in  respect  to 
state  offices. 

184 


FORMULATION  OF  THE  BUDGET 

Another  movement  in  the  direction  of  an  integrated  system 
of  administration  is  that  towards  the  establishment  of  strong 
boards  of  control  to  have  the  general  direction,  supervision 
and  control  over  institutions  receiving  aid  from  the  state  treas- 
uries. These  institutions  constitute  a  group  of  administrative 
agencies  quite  distinct  from  the  administrative  services  prop- 
erly speaking.  Formerly  each  of  these  institutions  addressed 
their  petitions  and,  in  so  far  as  they  made  any  reports  at 
all,  made  their  reports  directly  to  the  legislature.  It  was  a 
great  improvement  when  the  policy  was  adopted  of  setting 
up  special  bodies  which  should  stand  between  these  institu- 
tions and  the  legislature  and  serve  as  the  organs  through 
which  the  methods  of  accounting,  reporting  and  administra- 
tion generally  might  be  regulated  and  standardized,  their 
operations  supervised  and  controlled  and  their  applications 
for  funds  examined  and  reviewed.  This  movement  has  now 
gone  so  far  that  it  may  be  said  that  the  policy  of  securing 
control  over  these  institutions  in  this  way  has  become  the 
settled  policy  of  probably  a  majority  of  the  states. 

Still  another  movement  towards  the  establishment  of  an  in- 
tegrated administrative  system  is  found  in  the  action  taken 
by  a  considerable  number  of  states  to  group  related  services 
in  departments.  Examples  of  this  action  are  found  in  the 
creation  by  New  York,  Massachusetts  and  other  states  of  de- 
partments of  labor  to  have  jurisdiction  over  services  dealing 
with  labor  matters  such  as  bureau  of  labor  statistics,  boards 
of  conciliation  and  arbitration,  employment  bureaus,  factory 
inspection  services  and  the  like. 

Finally  must  be  mentioned  the  acts  just  considered  which 
impose  upon  the  Governor  the  duty  of  formulating  and  sub- 
mitting a  budget.  These  acts  in  themselves  tend  strongly  to 
put  the  Governor  in  the  position  of  administrator  in  chief. 
They  carry  with  them  the  duty  and  right  on  the  part  of  the 
Governor  to  inquire  into  the  administrative  organization  meth- 
ods and  needs  of  the  several  services;  and,  though  the  Gov- 
ernor does  not  have  the  authority  to  issue  orders  to  depart- 

185 


BUDGETARY  REFORM  IN  THE  STATES 

mental  heads  having  for  their  purpose  to  prescribe  uniform 
and  efficient  methods  of  administration  that  should  go  with 
his  office,  nevertheless  his  budget  framing  powers  will  place 
in  his  hands  large  powers  of  administrative  direction  and 
control. 

Important  as  are  these  movements  as  steps  in  the  right  di- 
rection they,  nevertheless,  fall  far  short  of  establishing  that 
definite  integrated  administrative  system  with  the  Governor 
as  administrator  in  chief  which  must  obtain  if  the  maximum 
of  efficiency  in  the  conduct  of  public  affairs  is  to  secure  a 
sound  basis  laid  for  a  scientific  budgetary  system.  Until 
recent  years  New  Jersey  was  the  only  state  having  an  ap- 
proximation to  this  system.  This  arose  from  the  fact  that 
not  only  was  the  Governor  the  only  elective  officer  but  that 
most  of  the  heads  of  administrative  offices  held  office  through 
appointment  by  him. 

*  In  1917  primacy  in  this  respect  was,  however,  taken  by  the 
state  of  Illinois  which,  by  an  act  passed  on  March  7  of  that 
year,  thoroughly  reorganized  the  administrative  branch  of  its 
government  upon  the  integrated  system.  This  action  was 
taken  upon  the  recommendation  of  its  special  joint  commit- 
tee of  the  two  houses  on  economy  and  efficiency  which  made 
a  painstaking  examination  of  the  whole  problem  of  adminis- 
tration and  budgetary  reform.  It  is  difficult  to  overempha- 
size the  importance  of  this  act.  It  points  the  way  and  fur- 
nishes the  model  for  action  which  it  is  to  be  hoped  will  be 
rapidly  followed  by  her  sister  commonwealths. 

Establishment  of  Central  Budgetary  and  Administra-' 
tive  Organs.  In  the  enactment  of  a  law  providing  for  the 
formulation  and  submission  of  a  budget  by  the  Governor  or 
some  other  authority,  a  state  has  made  but  the  first  step 
towards  securing  for  itself  a  scientific  budgetary  system. 
There  still  remain  the  important  tasks  of  working  out  and 
installing  a  system  of  accounts  and  reports  that  will  auto- 
matically produce  the  data  required  for  budgetary  purposes; 
of  devising  the  forms  upon  which  requests  for  appropriations 

1 86 


FORMULATION  OF  THE  BUDGET 

shall  be  made  by  spending  departments ;  of  reaching  a  decision 
regarding  the  scheme  of  classification  to  be  employed  in  fram- 
ing the  budget;  of  receiving  the  reports  and  estimates  as  first 
formulated;  of  subjecting  these  reports  and  estimates  to  criti- 
cal examination;  and,  on  the  basis  of  such  documents  and 
examination,  of  actually  framing  the  budget,  preparing  the 
summaries,  analyses  and  other  supporting  documents  that 
should  accompany  the  budget. 

It  must  be  evident  that  the  performance  of  these  opera- 
tions can  only  be  done  by  an  organ  of  high  competency.  This 
body,  moreover,  if  it  is  to  do  its  work  properly,  must  be  a 
permanent  service  and  one  having  authority  in  itself  or  as  the 
agent  of  the  Governor  to  issue  all  orders  necessary  to  secure 
the  standardization  of  methods  of  accounting  and  reporting, 
the  proper  return  of  estimates  of  expenditure  needs  and  the 
taking  of  all  other  steps  required  in  order  that  the  data  con- 
tained in  the  budget  may  be  presented  in  proper  form  ac- 
cording to  a  uniform  system  of  classification.  We  have  al- 
ready pointed  out  that  one  of  the  great  incidental  advantages 
resulting  from  the  adoption  of  a  proper  budgetary  system  is 
that  it  tends  to  bring  about  the  reorganization  of  the  admin- 
istrative branch  of  the  government  upon  an  integrated  system 
with  the  Governor  at  its  head.  A  second  great  advantage  that 
can  be  made  to  flow  from  it  is  that  of  securing  a  standardiza- 
tion of  business  practices  and  procedure.  Or,  to  put  this  con- 
versely, it  is  difficult,  if  not  impossible,  to  secure  a  proper 
budgetary  system  unless  such  unification  of  administrative 
methods  is  established. 

Another  feature  of  budgetary  practice  that  is  often  over- 
looked is  that  the  service  that  is  to  perform  this  work  of 
prescribing  the  system  of  budgetary  procedure,  and  of  receiv- 
ing the  estimates  and  collateral  data  and  of  actually  formulat- 
ing the  budget,  must  be  one  which  is  in  current  touch  with 
the  administrative  work  of  the  government.  Only  as  it  is 
in  such  constant  contact  with  the  administration  of  public 
affairs  is  it  in  position  intelligently  to  pass  judgment  upon 


BUDGETARY  REFORM  IN  THE  STATES 

appropriation  requests  and  to  frame  a  general  financial 
and  work  program  corresponding  to  the  real  needs  of  the 
state. 

The  need  for  an  organ  of  this  character  becomes  more  and 
more  imperative  as  a  government  passes  to  an  integrated  ad- 
ministrative system,  or  as  the  responsibility  of  the  Governor 
as  head  of  the  administration  is  emphasized.  Though  we 
have  considered  the  need  of  such  an  organ  specially  from 
the  standpoint  of  the  operation  of  a  budgetary  system  its  func- 
tions should  not  be  confined  to  that  field.  If  it  is  to  perform 
the  full  measure  of  its  usefulness  it  should  be  a  bureau  of  gen- 
eral administration  with  the  broad  function  of  taking  all  the 
steps  necessary  for  securing  an  efficient  administration  of 
public  affairs  and  of  serving  as  the  agency  through  which  the 
Governor  may  discharge  his  duties  as  head  of  the  administra- 
tion. That  the  need  for  such  an  organ  has  been  appreciated  is 
evidenced  by  the  numerous  special  commissions  on  economy 
and  efficiency  that  have  been  created  in  recent  years  by  the 
states.  Valuable  as  has  been  the  work  of  these  commissions 
much  more  important  and  lasting  results  could  be  secured  by  a 
permanent  body  such  as  we  have  been  considering. 

To  summarize,  it  will  be  seen  that  this  matter  of  the  crea- 
tion of  a  bureau  of  general  administration  is  closely  related 
to  that  of  the  establishment  of  an  integrated  system  of 
administration  and  that  both  have  a  very  important  bearing 
upon  the  problem  of  securing  an  effective  budgetary  system. 
That  there  may  be  no  doubt  about  the  position  here  taken, 
it  should  further  be  added  that  such  a  bureau,  if  established, 
should  be  given  the  status  of  an  organ  directly  dependent 
upon  the  Governor,  and  that  its  function  should  be  that  of 
acting  as  the  agent  of  the  latter  rather  than  of  exercising 
independent  powers  of  its  own. 

With  this  understanding  of  the  nature  of  the  problem  that 
is  presented  in  providing  the  administrative  machinery  needed 
for  the  proper  operation  of  a  budgetary  system,  we  are  now 
in  a  position  to  consider  the  extent  to  which  the  states  have, 

188 


FORMULATION  OF  THE  BUDGET 

in  their  legislation,  appreciated  this  need  and  made  provision 
for  meeting  it. 

In  seeking  to  do  this,  it  may  be  stated  at  the  outset  that, 
though  most  of  the  acts  that  have  been  passed  give  evidence 
that  this  need  is  appreciated,  few  have  made  adequate  pro- 
vision for  meeting  this  need.  Many  have  contented  them- 
selves with  such  general  provisions  as  that  the  spending  de- 
partments and  institutions  shall  submit  to  the  Governor,  or 
other  budget-framing  body,  the  estimates  and  reports  needed 
for  budgetary  purposes.  Others  have  taken  the  more  impor- 
tant step  of  vesting  in  some  authority,  usually  the  auditor, 
the  power  to  prescribe  a  uniform  system  of  accounting  and 
reporting  to  be  followed  by  all  departments  and  institutions; 
and  an  examination  of  the  statutes  of  the  state  would  probably 
reveal  that  this  has  been  done  in  many  cases  other  than  those 
represented  by  the  special  budgetary  enactment  which  we  have 
been  considering. 

Others  still  have  gone  a  step  farther  and  have  specially 
empowered  the  Governor  to  employ  such  assistance  as  is  re- 
quired by  him  for  the  discharge  of  his  duties  in  respect  to  the 
framing  of  a  budget.  In  respect  to  these,  it  may  be  noted 
that,  under  these  provisions,  it  may  be  possible  for  the  Gov- 
ernor, by  executive  act,  to  create  a  service  that  will  have  a 
permanent  status  and  discharge  the  duties  of  a  general  budg- 
etary organ.  It  would  be  far  preferable,  however,  that  such  an 
organ  should  be  definitely  established  and  its  duties  and  pow- 
ers defined  by  statute. 

In  all  cases  where  the  formulation  of  the  budget  has  been 
vested  in  a  board  or  commission  there  has,  of  course,  been 
created  a  budgetary  organ.  In  many,  if  not  most,  of  these 
cases  this  body  has  not  only  been  given  the  powers  needed  to 
secure  budgetary  data  in  proper  form  but  to  prosecute  all 
inquiries  necessary  to  enable  it  to  determine  the  real  needs 
of  the  estimating  services  and  the  efficiency  and  economy  with 
which  they  were  administering  their  affairs.  They  have  thus 
been  given,  in  no  small  degree,  the  character  of  bureaus  of 

189 


BUDGETARY  REFORM  IN  THE  STATES 

general  administration,  such  as  we  have  been  contending 
should  be  created  in  all  states.  The  main  criticism  that  may 
be  brought  against  the  acts  establishing  these  bodies  is  that 
the  duty  of  formulating  the  budget  was  not  placed  in  the 
hands  of  the  Governor  and  the  bodies  themselves  made  merely 
the  agencies  through  which  the  latter  in  practice  could  meet 
the  obligation  placed  upon  him. 

Among  the  bodies  of  this  character,  special  mention  should 
be  made  of  those  of  California,  Wisconsin  and  Illinois,  since 
in  them  we  find  the  policy  of  providing  for  a  strong  service 
of  general  administration  carried  further  than  has  been  the 
case  in  any  other  state. 

In  its  State  Board  of  Control,  created  in  1911,  California 
has  an  organ,  which,  as  stated  by  the  Governor  of  the  state, 
has  plenary  powers  over  the  business  and  financial  affairs  of 
the  state.  It,  moreover,  has  a  status  and  personnel  independ- 
ent of  and,  as  regards  the  powers  to  prescribe  methods  of 
business  procedure,  superior  to,  the  administrative  or  operat- 
ing departments  properly  speaking.  It  is  composed  of  three 
members  appointed  by  the  Governor  and  holding  office  at  his 
pleasure,  who  receive  an  annual  salary  of  $4,000  and  must 
devote  their  whole  time  to  their  official  duties.  This  body  thus 
constitutes  an  organ  of  general  administration  comparable  in 
character  to  the  British  Treasury.  Its  function  as  an  organ 
for  preparing  the  budget  to  be  submitted  to  the  legislature  is 
thus  but  an  integral  part  of  its  general  function  as  a  service 
of  overhead  administration. 

As  regards  the  beneficial  results  that  have  followed  from 
the  establishment  of  this  service  Governor  Johnson  bears  elo- 
quent testimony  in  his  message  to  the  legislature  in  1917. 
Under  the  caption  of  "State  Board  of  Control"  he  said : 

During  the  past  six  years,  California  has  demonstrated  that 
public  business  can  be  conducted  as  honestly  and  as  efficiently 
as  private  business  *  *  *  It  seems  incredible  now,  that 
prior  to  1911  there  had  not  been  for  many,  many  years  a  state 
audit ;  that  there  was  no  centralized  control  over  the  business 

190 


FORMULATION  OF  THE  BUDGET 

conducted  by  the  state,  no  mode  of  accurately  determining  the 
necessity  and  amount  of  appropriations,  and  no  supervision 
which  would  preclude  favoritism  in  bidding  *  *  *  The 
legislature  of  1911,  therefore,  passed  the  law  creating  the 
State  Board  of  Control  and  gave  to  that  board  plenary  powers 
over  the  business  and  financial  affairs  of  the  state  *  *  * 
Investigations  at  once  were  held  by  the  board  and  corruption 
and  fraud  in  the  business  of  the  state  uncovered.  Ruthlessly 
the  old  methods  were  destroyed  and  the  individuals  who  were 
guilty  were  removed  from  the  service  of  the  state.  But  the 
great  work  of  the  board  was  to  systematize  the  business  of 
California  in  such  way  that  it  might  challenge  comparison 
with  the  system  in  vogue  in  those  great  business  concerns  that 
are  models  of  commercial  enterprise.  *  *  *  The  old  log- 
rolling methods,  inefficiency,  fraud,  corruption  and  political 
control  have  been  displaced  by  a  budget  system,  a  searching 
financial  supervision,  modern  business  methods,  economy  and 
efficiency  *  *  *  The  business  of  the  State  of  California 
is  now  conducted  upon  approved  modern  lines  and  conducted 
as  efficiently  and  as  economically  as  any  systematic  and  scien- 
tifically managed  private  enterprise. 

We  have  devoted  space  to  recording  the  achievements  of 
this  board,  since  this  body,  both  in  the  character  of  its  status 
and  accomplishments,  furnishes  such  a  valuable  demonstration 
of  need  for  an  organ  of  this  kind  if  the  establishment  of  a 
budgetary  system  is  to  accomplish  its  real  purpose,  that  of 
securing  an  efficient  and  economical  administration  of  public 
affairs. 

Illinois,  acting  six  years  later  than  California,  must  be 
ranked  with  that  state  in  respect  to  action  having  for  its 
purpose  to  bring  into  existence  a  strong  service  of  general  ad- 
ministration. That  state,  as  has  been  pointed  out,  is  the  one 
American  commonwealth  which  has  courageously  reorganized 
her  administrative  system  upon  an  integrated  system.  In 
doing  so  she  appreciated  the  necessity  for  vesting  power  in 
some  authority  to  secure  a  proper  correlation  of  existing  serv- 
ices and  work  and  a  unification  and  standardization  of  finan- 
cial practice  and  procedure.  To  obtain  this  end  she  made  of 

191 


BUDGETARY  REFORM  IN  THE  STATES 

the  department  of  finance  what  is  practically  a  bureau  of  over- 
head administration  in  respect  to  financial  matters.  Not  only 
is  this  department  specifically  made  the  agent  of  the  Governor 
for  the  preparation  of  the  budget  and  given  a  special  officer, 
known  as  superintendent  of  the  budget,  to  have  direct  charge 
of  this  work,  but  to  it  is  entrusted  the  duty  of  prescribing 
the  system  of  accounting  and  reporting  to  be  followed  by  all 
services  of  the  state,  of  examining  and  auditing  of  accounts 
and  claims,  of  prescribing  uniform  rules  to  govern  purchasing 
operations,  of  maintaining  controlling  accounts,  of  preparing 
consolidated  financial  statements  and  reports  and,  to  use  the 
words  of  the  act,  "to  investigate  duplication  of  work  of  de- 
partments and  the  efficiency  of  the  organization  and  admin- 
istration of  departments  and  to  formulate  plans  for  the  bet- 
ter coordination  of  departments." 

As  a  result  of  this  action  taken  in  connection  with  the  es- 
tablishment of  an  integrated  administrative  system  and  the 
imposition  upon  the  Governor  of  the  duty  to  formulate  and 
present  the  budget,  Illinois  has  an  exceptionally  satisfactory 
system  in  so  far  as  the  problem  of  securing  a  properly  pre- 
pared and  administered  budget  is  concerned. 

Wisconsin,  in  making  provision  for  this  phase  of  the  budg- 
etary problem,  though  following  California  and  Illinois  in 
providing  for  a  special  organ  of  budgetary  and  general  ad- 
ministration, has  given  to  this  organ  quite  a  different  compo- 
sition. The  California  board,  it  will  be  remembered,  is  com- 
posed of  three  appointees  of  the  Governor  having  no  other 
official  duties,  while  the  Illinois  service  is  one  of  the  admin- 
istrative departments  of  the  government.  The  Wisconsin 
Board  of  Public  Affairs,  as  it  is  designated,  consists  of  ex- 
officio  members  representing  the  legislative  and  executive 
branches  of  the  government  and  three  persons  appointed  by 
the  Governor  with  the  approval  of  the  senate,  representing 
what  may  be  termed  the  outside  public.  The  legislative  rep- 
resentatives are  the  presiding  officers  and  the  chairmen  of  the 
finance  committees  of  the  two  houses.  The  executive  repre- 

192 


FORMULATION  OF  THE  BUDGET 

sentatives  are  the  governor  and  the  secretary  of  state.  The 
powers  of  this  body  as  a  bureau  of  general  administration 
though  possibly  not  plenary,  as  is  stated  of  the  California 
board,  are  nevertheless  very  comprehensive.  Thus,  after  con- 
ferring full  powers  upon  the  board  to  make  inquiries  regard- 
ing the  organization  and  methods  of  work  of  all  state  depart- 
ments and  institutions,  the  act  provides  that: 

1 i )  The  board  shall  have  such  supervision  of  every  public 
body  as  is  necessary  to  secure  uniformity  and  accuracy  of 
accounts.     It  may  inquire  into  the  methods  of  conducting  the 
affairs  of  any  public  body ;  it  may  prescribe  and  direct  the  use 
of  such  forms  of  accounts  as  may  be  necessary  to  carry  out 
the  purpose  of  this  chapter;  it  may  prescribe  and  direct  the 
use  of  standards  and  records  of  efficiency  of  employees;  it 
shall  inaugurate,  supervise  and  conduct  adequate  systems  of 
examination  and  inspection  of  accounts  of  every  such  public 
body,  it  may  cause  to  be  prepared  suitable  blanks,  books  and 
records  for  carrying  out  the  purposes  of  this  chapter;  and 
shall,  when  necessary,  furnish  such  blanks  and  records  to  any 
such  public  body;  provided,  that  when  the  expense  of  such 
blanks,  books,  or  records  has  been  charged  against  the  appro- 
priation for  the  board  of  public  affairs  the  secretary  of  state 
shall  charge  the  cost  of  supplies  so  furnished  against  the  gen- 
eral appropriation  account  of  the  public  body  receiving  the 
same  and  shall  credit  the  appropriation  of  the  board  of  public 
affairs  with  a  like  amount. 

(2)  The  board  shall  devise  for  all  public  bodies  uniform 
systems  of  accounts  and  uniform  accounting  procedures  ade- 
quate to  record  in  detail  all  transactions  affecting  the  acquij 
sition,  custodianship  and  disposition  of  values,  including  cash 
receipts  and  disbursements,  and  every  such  public  body  shall 
keep  its  accounts  and  maintain  its  accounting  procedure  ac- 
curately and  faithfully  as  prescribed  and  directed  by  the  board. 

Following  this  the  board  is  specifically  entrusted  with  the 
duty  of  formulating  and  submitting  to  the  legislature  a  bud- 
get with  supporting  documents.  The  fact  that  this  board  has 
independent  powers,  both  in  respect  to  the  formulation  of  a 
budget  and  as  a  bureau  of  general  administration,  instead  of 

193 


BUDGETARY  REFORM  IN  THE  STATES 

being  the  agency  through  which  the  Governor  might  per- 
form these  functions,  has  already  been  commented  upon  as 
doing  violence  to  the  principle  of  an  integrated  administra- 
tive system  with  the  Governor  as  its  responsible  head. 

Other  states  which  have  pursued  the  policy  of  establishing 
special  budgetary  boards  or  commissions  have,  as  stated,  cre- 
ated services  analogous  to  those  of  the  three  states  just  de- 
scribed. In  no  case,  however,  have  they  traveled  as  far  along 
the  road  towards  bringing  into  existence  a  strong  bureau  of 
general  administraton  as  these  states.  It  is  to  these  states, 
therefore,  that  one  should  look  for  guidance  in  working  out 
this  phase  of  budgetary  and  administrative  reform. 


CHAPTER  XI 

COMPARATIVE  ANALYSIS  OF  BUDGETARY  LEG- 
ISLATION OF  THE  STATES:  LEGISLATIVE  AC- 
TION UPON  THE  BUDGET 

The  establishment  of  a  proper  budgetary  system  has,  as 
has  been  pointed  out,  two  phases :  that  of  securing  a  properly 
formulated  budget  and  that  of  providing  a  proper  system  for 
taking  action  upon  such  budget.  Having  described  in  general 
terms  the  provisions  of  the  budget  acts  of  the  states  relating 
to  the  first  of  these  phases,  it  remains  for  us  to  consider  the 
provisions  that  have  been  made  in  respect  to  the  second. 

Did  space  and  time  permit,  it  would  be  of  great  interest  to 
study  the  legislative  procedure  employed  in  all  of  the  states 
for  the  handling  of  money  bills.  No  such  attempt,  however, 
is  here  made.  All  that  is  attempted  is  to  describe  the  action 
taken  by  the  states  in  respect  to  this  phase  of  the  problem  of 
budgetary  reform  as  contained  in  the  recent  laws  reproduced 
by  us  having  for  their  specific  purpose  the  introduction  of  a 
budget  system. 

Distinction  between  a  Budget  and  Revenue  and  Appro- 
priation Acts.  In  providing  for  the  procedure  to  be  employed 
in  taking  action  upon  a  budget  the  point  of  first  impor- 
tance is  the  recognition  of  the  distinction  between  a  budget 
and  the  bills  employed  to  put  the  budgetary  proposals  into 
effect.  The  budget  is,  or  should  be,  purely  an  information 
document.  As  such  it  should  present  data  regarding  financial 
operations  in  the  past,  present  treasury  conditions  and  pro- 
posals for  the  future  in  all  practicable  detail.  To  appro- 
priate funds  in  any  such  detail  would  result  in  depriving  the 
administrative  authorities  of  practically  all  discretionary  au- 

195 


BUDGETARY  REFORM  IN  THE  STATES 

thority  and  make  certain  that  allotment  of  funds  made  would 
not  correspond  to  the  real  necessities  of  the  services.  The 
failure  to  make  this  distinction  and  the  use  of  the  budget 
practically  as  an  appropriation  bill  have  been  responsible  for 
not  a  few  budgetary  systems  failing  to  give  satisfactory  results 
in  operation.  It  is  highly  desirable,  however,  that  the  appro- 
priation bill  shall  conform  as  regards  the  general  principles 
of  classification  of  items  with  the  budget.  This  can  be  secured 
by  having  the  itemization  in  the  appropriation  bill  only  go 
so  far  as  significant  totals  and  sub-totals  as  they  appear  in 
the  budget. 

Though  few  of  the  acts  that  we  have  been  considering  con- 
tain specific  provisions  regarding  the  character  and  form  to 
be  given  to  appropriation  bills,  most,  if  not  all,  of  them  are 
so  worded  as  to  make  it  clear  that  these  documents  are  to  be 
quite  distinct  from  the  budgets.  The  mistake  made  by  a  num- 
ber of  municipalities  in  treating  their  budgets  practically  as 
appropriation  bills  has  thus  been  avoided.  This  is  especially 
seen  in  the  provisions,  to  which  attention  will  next  be  directed, 
directing  the  authority  to  whom  is  entrusted  the  duty  of 
submitting  a  budget  to  submit  in  conjunction  therewith  a 
budget  bill. 

Distinction  between  General  and  Supplemental  Appro- 
priation Bills.  Another  principle  of  budgetary  legislation 
which  it  is  important  to  have  observed  is  that  of  having  all 
appropriations  for  the  support  of  the  government  provided 
for  as  far  as  is  practicable  in  a  single  appropriation  act. 
This  is  desirable  in  order  to  preserve  the  unity  of  the  task 
of  financing  a  government  which  it  is  one  of  the  main  pur- 
poses of  a  budgetary  system  to  secure. 

This  principle  is  definitely  recognized  by  the  legislation  of 
a  considerable  number  of  states  through  the  distinction  that 
is  made  between  what  are  known  as  general  appropriation  or 
budget  bills  and  supplemental  appropriation  bills  and  the  pro- 
vision that  as  far  as  possible  all  appropriations  for  the  opera- 

196 


LEGISLATIVE  ACTION 

tion  of  the  government  shall  be  contained  in  the  former  bills. 

The  four  states,  Maryland,  Delaware,  New  Mexico,  and 
Utah,  constitute,  as  has  been  pointed  out,  practically  a  class 
to  themselves  in  respect  to  the  character  of  their  budgetary 
legislation.  They  represent  the  ones  which  have  adopted  the 
budgetary  principles  set  forth  in  the  constitutional  amend- 
ment enacted  by  the  state  of  Maryland  in  1916.  The  acts  of 
the  three  other  states  show  plainly  that  they  are  modeled 
closely  upon  the  Maryland  constitutional  provision.  All  four 
of  these  states  provide  that  the  Governor  shall  transmit  with 
his  budget  a  "budget  bill"  which  it  shall  be  the  duty  of  the 
presiding  officers  of  the  two  houses  to  have  introduced,  and 
which,  as  will  shortly  be  pointed  out,  has  priority  over  the 
consideration  of  any  other  measure  carrying  an  appropria- 
tion. The  Vermont  act  provides  that  the  Committee  on 
Budget,  that  is,  the  body  to  which  is  entrusted  the  duty  of  pre- 
paring the  budget,  shall  likewise  transmit  with  the  budget  a 
budget  bill  and  that  this  bill  shall  contain  "all  the  expenditures 
of  the  state  in  all  its  departments  during  the  ensuing  biennial 
period."  The  New  Jersey  act  contains  the  still  more  emphatic 
provision  that  "no  money  shall  be  drawn  from  the  treasury 
except  by  the  general  appropriation  bill  and  it  is  the  intent 
of  this  act  that  no  supplemental  deficiency  or  incidental  bill 
shall  be  considered."  The  New  York  act  provides  that  the 
committees  to  which  is  entrusted  the  duty  of  preparing  the 
budget  shall  also  prepare  a  budget  bill,  and  the  Arizona  act 
that  a  dummy  budget  bill  shall  be  drafted  by  the  state  audi- 
tor and  attorney  general. 

Undoubtedly,  were  it  practicable  to  examine  into  the  legis- 
lative procedure  of  all  of  the  states,  it  would  be  found  that, 
though  there  is  no  express  statutory  command  to  this  effect, 
the  practice  of  providing  for  all  the  expenses  of  the  govern- 
ment as  far  as  possible  by  a  single  appropriation  bill  is  fol- 
lowed in  many  cases. 

Special  Procedure  for  Enactment  of  Supplemental  Ap- 
propriation Bills.  The  distinction  that  is  made  between  the 


BUDGETARY  REFORM  IN  THE  STATES 

general  appropriation  bill  and  supplemental  appropriation 
bills,  however,  goes  much  further  than  this.  It  is  indeed 
made  the  basis  of  the  whole  appropriation  system  of  the 
states  that  have  adopted  it.  All  four  of  the  states  falling  in 
what  may  be  termed  the  Maryland  group  thus  provide  that 
consideration  of  no  supplemental  appropriation  bill,  that  is, 
any  bill  other  than  the  budget  bill  carrying  an  appropriation 
or  of  a  nature  that  will  require  the  making  of  an  appropriation 
to  carry  it  into  effect,  will  be  in  order  until  final  action  is  had 
upon  the  budget  bill  in  both  houses.  Not  until  definite  provi- 
sion has  been  made  for  the  general  expenses  of  the  govern- 
ment is  it  competent  for  the  legislature  to  give  consideration 
to  other  appropriation  measures. 

This  is  but  one  of  the  safeguards  set  up  to  hold  in  check 
the  evil  of  special  appropriation  acts.  The  acts  contain  other 
provisions  having  for  their  purpose  to  make  difficult  the  pass- 
age of  such  acts.  The  Maryland  constitutional  amendment 
thus  provides  that  not  only  shall  neither  house  consider  any 
other  appropriation  until  the  budget  bill  has  been  finally  acted 
upon  by  both  houses,  but  that  no  such  other  appropriation 
shall  be  valid  unless  it  is  provided  for  in  a  separate  bill,  lim- 
ited to  some  single  work,  object  or  purpose,  which  bill  shall 
provide  the  revenue  necessary  to  pay  the  appropriation  by 
the  imposition  of  a  tax,  direct  or  indirect,  to  be  laid  and  col- 
lected as  shall  be  directed  in  the  bill,  and  that  this  bill  shall 
not  become  a  law  unless  it  is  passed  in  each  house  by  a  ma- 
jority of  the  whole  number  of  members  elected  or  deter- 
mined by  a  recorded  yea  and  nay  vote  on  its  final  pass- 
age. 

The  purpose  of  these  provisions  is  evident.  By  requiring 
that  each  appropriation  shall  be  provided  for  by  a  separate 
bill  it  is  hoped  to  do  away  with  log-rolling.  By  the  provision 
that  a  special  tax  must  be  levied  for  meeting  the  appropria- 
tion, those  standing  sponsors  for  the  bill  must  assume  re- 
sponsibility for  an  increase  in  taxation  before  their  constitu- 
ents. It  would  seem  that  under  these  provisions  few  special 

198 


LEGISLATIVE  ACTION 

appropriations  of  the  pork  barrel  type  would  get  through. 

The  provisions  of  the  other  three  states  are  not  so  drastic 
but  are  along  the  same  lines.  The  Utah  act  thus  substantially 
reproduces  the  Maryland  provisions  with  the  exception  that 
the  supplementary  appropriation  bills  need  not  provide  for  the 
levying  of  special  taxes  to  meet  the  appropriations  if  there 
is  free  money  in  the  treasury  available  for  that  purpose,  while 
the  Delaware  and  New  Mexico  acts  content  themselves  with 
the  provision  in  the  case  of  the  former  state,  that  "each  supple- 
mentary appropriation  bill  shall,  by  its  provisions,  provide  or 
designate  the  source  from  which  the  money  therein  appropri- 
ated is  to  be  derived"  and,  in  the  case  of  the  latter  state,  that 
"each  and  all  of  such  further  or  other  appropriations  shall  then 
be  made  by  separate  bills,  each  embracing  but  one  subject." 

Right  of  Legislature  to  Modify  Budgetary  Proposals. 
Much  the  most  important  question,  however,  that  is  raised 
in  respect  to  action  upon  a  budget  by  a  legislature  is  that  of 
the  powers  that  that  body  shall  have  to  modify  budgetary 
proposals  as  formulated  by  the  Governor  or  other  budgetary 
organs.  It  is  hardly  necessary  to  say  that  the  principle  that 
has  prevailed  universally  in  the  United  States  in  the  past  is 
that  the  function  of  determining  what  revenues  shall  be  raised 
and  what  funds  shall  be  voted  rests  chiefly  in  the  legislature. 
As  the  result  of  evils  which  have  accompanied  this  system 
and  which  it  is  unnecessary  to  recite  here,  there  has  arisen  a 
demand  that  this  power  of  the  legislature  to  modify  budg- 
etary proposals  be  limited.  Up  to  the  present  time  but  three 
states,  Maryland,  New  Mexico  and  Utah,  these  being  three  of 
the  four  states  which  we  have  stated  constitute  a  class  to 
themselves  as  regards  the  character  of  their  budgetary  legisla- 
tion, have  translated  this  demand  into  positive  action.  Of 
these  three  the  action  of  Maryland  is  much  the  most  impor- 
tant since  that  state  was  the  first  to  take  action  and  such 
action  is  unique  in  that  it  was  accomplished  through  a  formal 
amendment  of  the  state  constitution.  The  action  of  the  other 
two  states  was  modeled  closely  upon  that  of  Maryland.  The 


BUDGETARY  REFORM  IN  THE  STATES 

importance  of  their  action  warrants  our  reproduction  here 
in  full  of  the  provisions  of  the  acts  relative  to  this  matter. 
They  are  as  follows: 

Maryland.  The  General  Assembly  shall  not  amend  the 
budget  bill  so  as  to  affect  either  the  obligations  of  the  state 
under  Section  32  of  Article  III  of  the  Constitution,  or  the 
provisions  made  by  the  law  of  the  state  for  the  establishment 
and  maintenance  of  a  system  of  public  schools,  or  the  payment 
of  any  salaries  required  to  be  paid  by  the  state  of  Maryland 
by  the  constitution  thereof;  and  the  General  Assembly  may 
amend  the  bill  by  increasing  or  diminishing  the  items  therein 
relating  to  the  General  Assembly  and  by  increasing  the  items 
therein  relating  to  the  judiciary,  but,  except  as  hereinbefore 
specified,  may  not  alter  the  said  bill  except  to  strike  out  or 
reduce  items  therein,  provided,  however,  that  the  salary  or 
compensation  of  any  public  officer  shall  not  be  decreased  dur- 
ing his  term  of  office;  and  such  bill  when  and  as  passed  by  both 
houses  shall  be  a  law  immediately  without  further  action  by 
the  Governor. 

Utah.  The  State  Legislature  may  not  alter  said  [budget] 
bill  except  to  strike  out  or  reduce  items  therein;  provided, 
however,  appropriations  necessary  for  the  payment  of  interest 
or  principal  due  on  the  public  debt  shall  not  be  reduced  or 
eliminated ;  and  provided  further,  that  the  salary  or  compen- 
sation of  any  public  officer  shall  not  be  decreased  during  his 
term  of  office. 

New  Mexico.  The  Legislature  shall  not  increase  the 
amount  of  any  items  covered  by  appropriation  bills  as  sub- 
mitted by  the  Governor,  other  than  those  covering  items  for 
the  Legislature  or  the  Judicial  Department,  but  may  strike 
out  or  reduce  any  item  or  items  contained  therein. 

From  the  foregoing  it  will  be  seen  that  these  three  states 
have  adopted  substantially  the  British  system  of  an  execu- 
tively formulated  budget  that  may  not  be  increased  by  the 
legislature.  Owing  to  the  principle  of  the  separation  of  pow- 
ers between  the  legislative,  judicial  and  executive  branches  of 
government  which  obtains  in  the  United  States,  special  excep- 
tion has,  however,  to  a  certain  extent  been  made  in  the  case 
of  appropriations  proposed  for  the  first  two  branches.  In  the 

20Q 


LEGISLATIVE  ACTION 

budget  acts  of  these,  as  well  as  other  states,  provision  has  been 
made  that  in  formulating  the  budget  the  items  for  one  or 
both  of  these  branches  shall  be  inserted  in  the  budget  as  they 
are  submitted  by  the  proper  authorities  representing  these 
branches.  If  we  consider  these  provisions  in  connection  with 
those  governing  the  enactment  of  special  or  supplemental  ap- 
propriation bills,  it  will  be  seen  how  far  these  states  have  trav- 
eled along  the  road  of  bringing  into  existence  an  effective 
budgetary  system. 

Provision  for  the  Allotment  or  Transfer  of  Ap- 
propriations. Mention  has  been  made  that  one  of  the  most 
important  special  problems  involved  in  the  framing  of  appro- 
priation acts  is  that  of  determining  the  extent  to  which  ap- 
propriations shall  be  itemized.  The  problem  here  presented  is 
that  of  harmonizing  legislative  control  in  respect  to  the  pur- 
poses for  which  money  voted  shall  be  expended  with  executive 
discretion  in  the  making  of  such  expenditures.  Complete 
legislative  control  can  of  course  be  secured  by  itemizing  ap- 
propriations in  detail;  that  is,  by  enacting  what  is  known  as 
a  segregated  budget  bill.  The  objections  to  this  policy  are 
however  obvious.  It  is  manifestly  impossible  to  foresee 
months  or  a  year  in  advance  what  are  going  to  be  the  particu- 
lar needs  of  the  several  services;  and,  if  administrative  heads 
are  not  given  a  reasonable  discretion  in  respect  to  the  ex- 
penditure of  funds  it  is  certain  that  they  will  not  be  able  to 
administer  their  services  either  efficiently  or  economically. 
The  grant  of  too  great  latitude  to  administrative  officers,  on 
the  other  hand,  means  that  the  legislature  abdicates  to  that 
extent  the  power  to  determine  how  moneys  shall  be  expended 
and  throws  open  the  door  to  possible  administrative  abuses. 

Three  ways  of  harmonizing  these  conflicting  considerations 
are  open.  One  is  by  installing  a  system  of  accounts  and  re- 
ports which,  through  the  budget,  will  permit  the  legislature  to 
know  in  detail  how  money  voted  has  been  expended.  Another 
is  by  establishing  a  system  under  which  lump  sum  appropria- 
tions shall  be  formally  allotted  to  more  specific  heads  by  ad- 

20 1 


BUDGETARY  REFORM  IN  THE  STATES 

ministrative  officers  and  accounts  be  kept  of  such  allotments 
in  the  same  way  as  of  appropriation  heads.  And  a  third  is  by 
setting  up  a  system  under  which  transfers  of  funds  may  be 
made  from  one  appropriation  head  to  another,  upon  the  ap- 
proval of  some  authority  being  had. 

The  great  majority  of  the  budget  acts  of  the  states  under 
consideration  in  this  volume  either  make  express  provision 
for  perfecting  the  system  of  accounting  and  reporting  of  the 
state  or  vest  authority  in  some  officer  to  take  steps  in  this 
direction.  Many  other  states  in  pursuance  of  laws  already  on 
the  statute  books  are  likewise  doing  much  in  this  way.  It 
would  take  us  too  far  afield  to  attempt  to  characterize  all 
these  acts. 

It  is,  however,  of  interest  to  draw  attention  to  the  fact 
that  certain  of  the  states  have  made  provision  for  the 
adoption  of  an  allotment  or  transfer  system  such  as  has  been 
mentioned  above.  Thus  the  New  Jersey  act  contains  the  fol- 
lowing section: 

In  order  that  some  degree  of  flexibility  in  appropriations 
may  be  had,  any  department  or  other  state  agency  receiving 
an  appropriation  by  any  future  act  of  the  legislature  may 
apply  to  the  State  House  Commission  for  leave  to  transfer  a 
part  of  any  item  granted  to  such  department  or  agency  to 
any  other  item  in  such  appropriation.  Such  application  shall 
only  be  made  during  the  current  year  for  which  the  appropri- 
ation was  made,  and  if  the  State  House  Commission  shall 
consent  thereto;  it  shall  notify  the  Comptroller  thereof  in 
writing,  whereupon  the  Comptroller  shall  place  the  amount 
so  transferred  to  the  credit  of  the  items  so  designated;  pro- 
vided, however,  that  no  sum  appropriated  for  any  permanent 
improvement  shall  be  used  for  maintenance  or  for  any  tempo- 
rary purpose. 

The  Maryland  budget  bill  for  1919  and  1920,  the  first  to 
be  formulated  under  the  new  budgetary  provision  of  the 
constitution,  contains  the  following  section  making  detailed 
provision  for  securing  flexibility  in  the  expenditure  of  appro- 
priations through  a  transfer  system. 

202 


LEGISLATIVE  ACTION 

Sec.  3.  And  be  it  further  enacted,  That  the  items  and 
amounts  which  hereinafter  follow  the  sums  appropriated,  and 
which  are,  respectively,  entitled  "Schedule/'  do  not  consti- 
tute appropriations,  but  represent  the  initial  plan  of  distri- 
bution and  apportionment  of  the  appropriations  to  which  they, 
respectively,  refer.  Each  appropriation  shall  be  paid  out  only 
in  accordance  with  the  Schedule  therefor,  if  any,  unless  such 
Schedule  be  amended  in  the  following  manner :  Any  depart- 
ment, board,  commission  or  officer  may  at  any  time  submit 
in  writing  to  the  Governor  an  amended  schedule  for  the  dis- 
tribution and  apportionment  of  the  appropriations  made  to  it 
or  him,  or  any  unexpended  balance  thereof,  different  from  the 
manner  set  forth  in  the  Schedule  contained  in  this  Act.  The 
Governor  may  himself  make  such  an  amended  Schedule,  if 
the  same  be  necessary,  with  respect  to  the  appropriations  for 
the  Executive  Department.  If  the  Governor  shall  make  such 
an  amended  Schedule  with  respect  to  the  appropriations  for 
the  Executive  Department  or  if  he  shall  approve  an  amended 
Schedule  when  submitted  to  him  as  aforesaid,  then  he  shall 
transmit  the  same  with  his  certificate  of  approval  to  the  Comp- 
troller, and  thereafter  the  appropriation,  or  the  unexpended 
balance  thereof,  shall  be  paid  out  in  accordance  with  such 
amended  Schedule.  Any  amended  Schedule,  so  submitted  to 
the  Governor  may  be  withdrawn  and  amended  to  meet  any  ob- 
jections of  the  Governor,  and  then  resubmitted.  Any  such 
amended  Schedule  may  be  again  amended,  at  any  time,  in  like 
manner  and  with  like  effect.  All  amendments  in  Schedules 
thus  made  or  approved  by  the  Governor  shall  be  reported  by 
him  to  the  next  session  of  the  General  Assembly. 

In  Ohio,  according  to  the  budget  commissioner  appointed 
by  the  Governor  to  assist  him  in  the  work  of  formulating 
the  budget,  special  attention  has  been  given  to  working  out 
this  problem  of  securing  flexibility  in  the  expenditure  of  funds 
granted  without  destroying  the  control  over  expenditures  that 
should  always  be  preserved.  The  means  employed  in  meeting 
this  problem  have  been  described  by  the  budget  commissioner 
in  a  passage  of  his  paper  on  the  Ohio  budget  system,  already 
reproduced,  but  which  will  bear  statement  again  in  this  place. 
After  reciting  the  advantages  and  disadvantages  attaching  to 
both  lump-sum  and  detailed  appropriations  he  says : 

203 


BUDGETARY  REFORM  IN  THE  STATES 

Not  until  the  budget  was  established  in  1914  was  any  at- 
tempt made  to  combine  the  virtues  of  the  two  systems  and 
eliminate  their  vices.  In  order  to  avoid  the  evils  of  both  lump- 
sum  and  specific  appropriations,  appropriations  were  made 
specifically  but  were  provided  with  the  necessary  degree  of 
flexibility.  This  was  done  by  means  of  the  transfer  system 
which  made  it  possible  to  appropriate,  instead  of  maximum 
estimates,  those  slightly  above  the  minimum.  Provided  with 
the  privilege  of  transfer,  departmental  officials  could  reduce 
their  estimates  on  each  item  knowing  that  according  to  the 
"laws  of  probability"  all  projects  would  not  cost  the  maximum, 
and  that  the  small  margin  of  safety  could  be  transferred  from 
those  which  cost  the  minimum  to  the  few  that  actually  ap- 
proach the  maximum.  The  result  of  following  this  plan  was 
economy  and  smaller  appropriations  for  specific  items,  and  in 
consequence  a  smaller  budget.  Along  with  this  a  check  was 
provided  on  expenditures  for  the  reason  that  the  request  for 
a  transfer  invited  investigation  by  the  Emergency  Board,  and 
required  a  statement  of  explicit  reasons  why  the  fund  to  which 
the  transfer  was  sought  was  not  adequate. 

The  Tennessee  act  makes  provision  for  securing  flexibility 
in  the  expenditure  of  funds  through  permitting  transfers  be- 
tween appropriation  heads  upon  the  approval  of  the  State 
Budget  Commission  being  obtained  and  through  placing  at 
the  disposition  of  the  Budget  Commission  an  emergency  fund 
to  be  used  by  it  in  meeting  emergency  claims  not  covered  by 
the  budget  bill.  The  sections  of  the  act  covering  these  two 
points  read  as  follows: 

*  *  *  which  budget  shall  include  *  *  *  an  esti- 
mate for  an  appropriation  for  emergency  purposes  for  the  en- 
suing biennial  period;  *  *  * 

The  money  appropriated  for  emergency  purposes  shall  be 
expended  only  by  the  Budget  Commission  for  the  payment  of 
emergency  claims  against  the  state  for  which  no  specific  ap- 
propriations shall  have  been  made,  and  in  every  such  case  the 
Budget  Commission  shall  certify  in  writing  to  the  Treasurer 
and  Comptroller  that  such  a  claim  is  an  emergency  claim  and 
state  their  reasons  in  writing  for  the  expenditure  from  said 
emergency  fund. 


204 


LEGISLATIVE  ACTION 

No  transfer  of  funds  appropriated  for  any  item  in  the  ap- 
propriation for  any  state  office,  department,  commission,  board 
or  institution,  shall  be  made  except  upon  the  written  request 
of  the  chief  officer  or  officers  of  such  state  office,  department, 
commission,  board  or  institution,  to  the  Budget  Commission, 
which  request  shall  be  granted  in  writing  by  the  Budget  Com- 
mission if,  in  its  judgment,  such  a  transfer  of  funds  is  deemed 
necessary  or  expedient. 

The  Minnesota  act  provides  for  an  allotment  system  in  the 
following  way: 

It  shall  be  the  duty  of  each  disbursing  officer  or  board,  with- 
in thirty  days  after  the  passage  of  any  appropriation  by  the 
state  legislature  to  allot  within  each  appropriation  to  be  ex- 
pended under  his  or  its  direction  the  amounts,  if  any,  for  the 
several  purposes  set  forth  in  the  "budget"  submitted  to  the  leg- 
islature, not  inconsistent  with  the  terms  of  the  appropriation 
act.  Subject  to  the  restrictions  of  the  appropriation  act,  allot- 
ments may,  in  case  of  necessity,  be  altered  by  the  officer  or 
board  charged  with  the  disbursement  thereof.  All  such  allot- 
ments and  any  changes  thereof  shall,  as  soon  as  made,  be  filed 
with  the  state  auditor. 

Right  of  Governor  and  Departmental  Heads  to  Be 
Heard  by  Legislature  on  Budgetary  Proposals.  Another 
feature  of  legislative  procedure  governing  the  consideration 
of  budgetary  proposals  covered  by  some  of  the  acts  is  that 
giving  to  the  Governor  and  heads  of  departments  and  insti- 
tutions the  right  to  be  heard  by  the  legislature  in  support  of 
their  proposals.  The  Maryland  constitutional  amendment  thus 
provides  that — 

The  Governor  and  such  representatives  of  the  executive  de- 
partments, boards,  officers  and  commissions  of  the  state  ex- 
pending or  applying  for  State's  moneys,  as  have  been  des- 
ignated by  the  Governor  for  this  purpose,  shall  have  the  right, 
and  when  requested  by  either  house  of  the  legislature,  it  shall 
be  their  duty  to  appear  and  be  heard  with  respect  to  any  budget 
bill  during  the  consideration  thereof,  and  to  answer  inquiries 
relative  thereto. 

205 


BUDGETARY  REFORM  IN  THE  STATES 

In  this  provision  special  attention  should  be  directed  to 
the  fact  that  under  it  heads  of  departments  and  other  services 
do  not  have  the  right  on  their  own  initiative  to  appear  before 
the  legislature  but  must  be  directed  to  do  so  either  by  the 
Governor  or  one  of  the  legislative  houses.  This  is  a  very 
wise  requirement  since  one  of  the  evils  of  the  old  system  was 
the  extent  to  which  department  and  institution  heads  went  to 
the  legislature  to  lobby  for  their  particular  interests.  To  per- 
mit them  to  appear  without  the  wish  of  the  Governor  or  the 
legislature  would  tend  to  lessen  the  responsibility  of  the 
Governor  for  the  budget  and  thus  defeat  in  a  measure  the 
whole  purpose  of  the  reform. 

The  Delaware  and  New  Mexico  acts  contain  provisions 
similar  to  that  of  Maryland  giving  to  the  Governor  and  heads 
of  departments  and  institutions  the  right  to  appear  before,  and 
be  heard  by,  the  legislature  when  the  budget  bill  is  under  con- 
sideration with  the  exception  that  no  provision  is  made  that 
the  heads  of  departments  and  institutions  must  first  receive 
the  authorization  of  the  Governor  before  they  can  exercise 
that  right.  The  Utah  act  contains  no  provision  regarding  the 
right  of  the  Governor  or  other  administrative  officers  to  ap- 
pear before  the  legislature.  The  New  York  act  contains  the 
provision  that  the  heads  of  departments  and  institutions  shall 
have  the  right  to  be  heard  by  the  legislature  when  the  budget 
bill  is  under  consideration  but  makes  no  mention  of  the  Gov- 
ernor having  the  same  right.  This  omission  is  undoubtedly 
deliberate  since  that  act  is  based  on  the  principle  of  vesting  re- 
sponsibility for  the  formulation  of  the  budget  in  the  legisla- 
tive rather  than  the  executive  branch  of  the  government. 


CHAPTER  XII 
CONCLUSION :  GENERAL  SUMMARY 

When  the  writer  began  the  preparation  of  the  present  vol- 
ume he  was,  of  course,  aware  that  a  certain  amount  of  work 
had  been  projected,  or  even  accomplished,  by  the  states  look- 
ing to  the  introduction  by  them  of  a  budgetary  system.  The 
rapidity  with  which  the  movement  for  budgetary  reform,  once 
started,  has  spread,  and  the  remarkable  progress  that  has 
already  been  achieved  came  to  him,  as  they  doubtless  will  to 
the  reader  of  the  foregoing,  as  a  revelation. 

In  our  comment  on  the  character  of  the  action  taken  by  the 
individual  states  we  have  sought  to  make  known  in  each  case 
the  extent  to  which  such  action  fails  to  correspond  to  correct 
budgetary  principles  or  falls  short  of  providing  for  all  the 
features  that  must  be  covered  if  a  thoroughly  satisfactory  and 
workable  budgetary  system  is  to  be  established.  Criticism  of 
this  kind  must  not,  however,  be  interpreted  as  indicating  that 
the  states  have  failed  in  their  efforts.  The  fact  is  quite  the 
contrary.  In  almost  all  cases  the  action  taken  has  represented 
an  advance  toward  the  goal  sought.  The  only  general  failure 
on  their  part  has  been  that,  with  few  exceptions,  they  have 
failed  to  appreciate  the  many  different  factors  that  are  in- 
volved in  the  problem — the  necessity  for  an  integrated  admin- 
istrative system,  with  the  Governor  definitely  installed  at  its 
head  as  administrator  in  chief ;  the  requirement  that  estimates 
for  expenditures  for  a  fiscal  period  should  go  forward  as  a 
consolidated  statement  properly  classified  and  analyzed  and  be 
accompanied  by  supporting  data  regarding  revenues  and  ex- 
penditures in  the  past  and  present  treasury  conditions;  the 
imperative  necessity  that  the  duty  of  formulating  and  pre- 
207 


BUDGETARY  REFORM  IN  THE  STATES 

senting  this  financial  report  and  program  shall  be  vested 
squarely  in  the  hands  of  the  Governor;  the  necessity  for  the 
creation  of  a  special  organ  under  the  immediate  direction  of 
the  Governor,  through  which  the  latter  can  exercise  his  powers 
as  head  of  the  administration,  keep  in  current  touch  with  the 
organization,  methods,  work,  and  needs  of  the  several  services 
subject  to  his  general  direction,  supervise  and  control  them, 
and  thus  be  in  a  position  intelligently  to  pass  upon  their  ex- 
penditure estimates,  and,  upon  them  as  a  basis,  to  formulate 
his  own  work  program;  the  need  for  a  uniform  system  of 
accounting  and  reporting  that  will  currently  produce  the  in- 
formation required  for  budgetary  purposes;  the  special  prob- 
lems of  the  character  and  form  of  appropriation  acts,  the  ex- 
tent to  which  appropriations  shall  be  made  under  general 
heads,  or  itemized,  and  provision  be  made  for  securing  flexi- 
bility in  the  expenditure  of  funds  granted  through  the  estab- 
lishment of  a  system  of  transfers  or  otherwise;  and,  finally, 
the  whole  great  question  of  the  power  of  the  legislature  to 
modify  budgetary  items  and  the  procedure  to  be  employed  by 
them  in  considering  and  taking  action  upon  such  proposals. 

A  study  of  the  steps  taken  by  the  several  states  shows  that 
few,  if  any,  have  adequately  covered  all  of  these  points.  It 
would  be  a  remarkable  fact  if  they  had  done  so.  The  impor- 
tant thing  is,  however,  that  so  large  a  number  have  by  their 
action  definitely  recognized  their  dissatisfaction  with  existing 
conditions  and  seen  in  the  establishment  of  a  budget  system 
the  means  through  which  improvement  is  to  be  accomplished. 
In  this,  as  most  other  movements  for  governmental  reform, 
the  vital  thing  is  to  get  established  the  conviction  on  the  part 
of  those  responsible  for  the  conduct  of  affairs  that  present 
conditions  are  unsatisfactory  and  the  adoption  by  them  of 
the  general  principle  to  be  followed  in  bringing  about  an  im- 
provement in  such  conditions.  This  position  may  now  be  said 
to  be  definitely  attained.  Were  it  possible  to  secure  complete 
data  regarding  not  only  action  had  but  proposals  for  reform 
in  all  the  states,  it  would  probably  be  found  that  there  is  not 

208 


GENERAL  SUMMARY 

a  single  state  in  which  the  introduction  of  a  budget  system 
is  not  being  actively  urged.  As  it  is,  in  considerably  more 
than  half  of  the  states,  as  shown  by  the  present  volume,  posi- 
tive action  has  been  taken  in  this  direction. 

A  feature  of  this  action  that  warrants  special  notice  is  the 
recentness  with  which  it  has  been  taken.  Practically  all  of 
the  legislation  had  dates  from  the  last  four  or  five  years  and 
much  of  it  was  enacted  in  the  past  year.  This  means  that 
the  movement  for  reform,  notwithstanding  the  amount  of 
work  actually  done,  may  be  deemed  to  have  but  barely  begun, 
and  that,  consequently,  still  more  vigorous  efforts  may  be 
confidently  anticipated. 

Another  aspect  of  the  work  should  be  commented  upon  by 
way  of  a  caution.  It  will  be  noted  that  the  acts  of  the  several 
states  providing  for  the  introduction  of  a  budgetary  system 
vary  widely  in  respect  to  the  extent  to  which  the  details  of 
the  system  to  be  established  are  set  forth  in  the  acts  them- 
selves. Some  of  the  acts  content  themselves  with  the  bare 
provision  that  the  Governor  shall  prepare  and  submit  a  budget 
to  each  session  of  the  legislature  and  that  he  shall  have  the 
power  to  require  of  the  spending  departments  such  informa- 
tion as  he  needs  for  that  purpose.  Others  specify  in  detail 
the  procedure  to  be  followed  by  the  departments  in  preparing 
and  submitting  their  estimates  to  the  Governor,  the  manner 
in  which  the  budgetary  data  shall  be  classified,  the  character 
of  the  supporting  financial  statements  that  shall  be  incorpo- 
rated in  the  budget,  etc.  It  would  be  a  mistake  to  assume 
that  the  latter  class  of  acts  necessarily  provide  for,  or  will  re- 
sult in,  a  more  complete  or  satisfactory  budgetary  statement 
and  procedure  than  the  former.  There  is,  of  course,  an 
advantage  in  setting  forth  in  detail  the  system  to  be  followed, 
since  thereby  the  will  of  the  legislature  is  more  clearly  made 
known  and  the  obligations  imposed  more  definitely  stated. 
On  the  other  hand,  unless  great  care  has  been  taken  in  work- 
ing out  these  details  and  the  nature  of  the  problem  has  been 
clearly  understood,  there  is  danger  that  the  hands  of  the  execu- 

209 


BUDGETARY  REFORM  IN  THE  STATES 

tive  will  be  unduly  tied  in  his  efforts  to  work  out  a  proper 
system.  Whether  the  more  detailed  act  is  superior  to  the 
more  summary  one,  or  not,  thus  depends  wholly  upon  the 
character  of  its  provisions. 

This  suggests  a  vital  feature  of  the  whole  budgetary  prob- 
lem. In  the  passage  of  an  act  providing  for  the  adoption  of 
a  budgetary  system  a  state  has  made  but  a  first  step.  There 
still  remains  the  important  task  of  organizing  and  adminis- 
tering this  system  in  practice.  A  budget,  if  it  is  to  accom- 
plish its  purpose,  must  be  a  very  carefully  prepared  document. 
In  our  volume  on  the  "Problem  of  a  National  Budget,"  we 
have  pointed  out  that  for  administrative  and  budgetary  pur- 
poses it  is  desirable  that  information  shall  be  available  regard- 
ing expenditures  from  the  five  standpoints  of  funds,  organiza- 
tion units,  activities,  character  of  expenditures  (i.e.  whether 
the  expenditures  are  for  capital  outlay,  fixed  charges  or  current 
expenses)  and  objects  of  expenditure;  that  the  system  of  ac- 
counts and  reports  shall  be  so  devised  as  to  permit  of  the 
classification  of  expenditures  from  these  several  standpoints; 
and  that  in  the  formulation  of  the  budget  one  of  these 
standpoints  shall  be  made  the  primary  principle  of  classifica- 
tion and  rigidly  adhered  to,  information  from  the  other  stand- 
points being  made  available  through  supporting  analyses. 

With  the  principle  of  a  budget  once  established  by  law 
there  thus  still  remains  the  task  of  working  out  a  system  of 
accounting  and  reporting  and  of  estimating  future  needs  that 
will  ensure  that  the  budget  as  submitted  to  the  legislature  will 
be  in  proper  form,  and  especially  one  that  will  enable  the 
legislator  with  little  knowledge  of  accounting  methods  to  un- 
derstand clearly  the  showing  made.  No  single  state  has  as 
yet  worked  this  problem  out  in  a  satisfactory  manner  and 
much  the  most  important  work  to  be  done  during  the  next 
few  years  lies  in  this  field, 


APPENDICES 
APPENDIX  I 

Extracts  from  Report  of  Committee  on  Finances,  Revenues 
and  Expenditures,  New  York  Constitutional  Convention, 
1915,  Favoring  Adoption  of  Constitutional  Amendment 
Providing  for  a  Budget  Setting  Forth  Defects  of  Existing 
Appropriation  System  in  New  York  State. 

I.     Lack  of  Responsible  Revision  of  the  Departmental 
Estimates 

Under  the  laws  of  1910,  chap.  149,  the  annual  estimates  of 
the  various  departments,  bureaus  and  commissions  of  the  state 
are  to  be  submitted  by  them  to  the  Comptroller  on  November 
15  of  every  year  for  transmission  to  the  legislature.  The 
Comptroller  has  no  power  to  revise  or  reduce  these  estimates 
when  submitted,  or  even  to  compel  their  timely  submission. 
His  only  function  is  to  assemble  them  and  transmit  them  to 
the  legislature.  No  other  executive  officer  has  any  power  to 
revise  or  coordinate  them. 

As  a  result,  they  are  made  up  by  the  various  bureau  chiefs, 
who  consider  only  their  desires  without  regard  to  the  revenues 
or  other  needs  of  government,  and  as  a  result  the  aggregate 
of  these  estimates  mounts  into  a  sum  which  bears  no  respon- 
sible relation  either  to  any  consistent  plan  for  expenditures 
for  the  coming  year  or  to  any  plan  for  raising  revenue.  In 
size  they  are  limited  only  by  the  enthusiasm  of  each  bureau 
chief  for  the  activities  of  his  own  bureau. 

The  evil  is  very  much  aggravated  by  the  fact  that  there  is 
no  adequate  organization  of  these  bureaus  and  commissions 
into  a  limited  number  of  departments.  The  estimates  of  the 
various  officers,  instead  of  being  sent  to  the  Comptroller 
through  a  departmental  chief,  who  can  revise  and  reduce  the 
estimates  of  his  subordinates,  are  transmitted  directly  to  the 
Comptroller.  Almost  the  only  exception  to  this  lack  of  sys- 

211 


BUDGETARY  REFORM  IN  THE  STATES 

tern  is  in  the  somewhat  limited  oversight  exercised  by  the  Fis- 
cal Supervisor  of  Charities. 

As  a  result,  when  these  estimates  reach  the  legislature  they 
are  regularly  so  high  that  very  little  attention  is  paid  to  them. 
They  are  necessarily  treated  as  mere  requests  for  money  de- 
sired, rather  than  as  responsible  estimates  of  the  amounts  re- 
quired. The  legislature  is  therefore  itself  forced  to  under- 
take the  work  of  proposing  and  formulating  for  the  first  time 
a  program  of  the  annual  expenditures. 

II.     The  Legislature  is  not  the  Proper  Body  to  Prepare  a 
Financial  Plan  of  Expenditure. 

Your  committee  has  reached  the  conclusion  that  the  legis- 
lature is  not  the  proper  branch  of  the  government  to  initiate 
such  a  program  of  annual  expenditures,  and  that  in  attempt- 
ing to  do  so  it  labors  under  the  following  insuperable  disad- 
vantages : 

(a)  Its  proper  work  is  legislative;  it  has  no  admin- 
istrative control  or  authority  over  the  bureaus  and  de- 
partments through  which  the  moneys  of  the  state  are  ex- 
pended and  necessarily  cannot  have  such  authority.     It 
is  therefore  without  the  consistent  regular  information 
as  to  operating  difficulties,  problems,  methods  and  costs 
which  would  naturally  come  to  the  superior  officer  of 
those  bureaus.     Instead,  it  must  act  upon  such  informa- 
tion as  it  can  acquire  through  hearings  held  by  commit- 
tees, meeting  only  occasionally. 

The  legislature  cannot  exercise  executive  supervision 
to  compel  a  given  bureau  to  try  to  produce  the  desired 
result  with  less  money  by  adopting  a  more  efficient 
method.  It  cannot  exercise  executive  authority  to  recon- 
cile conflicts  between  overlapping  and  encroaching  bu- 
reaus, so  as  to  prevent  duplication  of  effort  and  expense. 
In  a  word,  it  cannot  produce  the  constant  necessary  team 
play  and  cooperation  which  is  essential  to  economy. 

(b)  The  legislature  is  under  the  further  disadvantage 
that  its  members,  instead  of  being  responsible  solely  to 
the  state  as  a  whole,  are  each  responsible  to  and  depend- 
ent upon  a  single  district  of  the  state.     A  financial  pro- 
gram made  up  in  the  first  instance  by  the  legislature,  nec- 
essarily tends  to  represent  a  compromise  or  bargain  be- 

212 


APPENDICES 

tween  different  districts,  rather  than  the  viewpoint  of 
the  state  as  a  whole.  The  treatment  of  the  multitude  of 
separate  items  necessarily  tends  to  that  process  of  give 
and  take  which  has  become  so  common  in  America  as 
to  be  stigmatized  by  the  terms  "log-rolling"  and  "pork 
barrel." 

(c)  In  the  third  place,  the  very  fact  that  the  program 
is  made  up  in  the  legislature  at  once  tends  to  shield  it 
from  'real  criticism  by  the  legislature.    No  body  can  ade- 
quately criticize  its  own  work.    This  applies  both  to  criti- 
cism by  the  majority  and  minority  parties.    A  real  budget 
program  presented  by  the  executive  to  the  legislature 
should  receive,  and  in  other  countries  regularly  does  re- 
ceive, criticisms  and  suggestions,  even  from  its  own  party 
members.    The  viewpoint  of  the  man  who  grants  money 
is  different  from  the  viewpoint  of  the  man  who  asks  for 
it,  even  when  they  both  belong  to  the  same  party.    Under 
our  methods  the  man  who  makes  up  the  program  is  the 
same  man  who  afterwards  leads  the  debate  on  the  ma- 
jority side.     No  criticism  whatever  from  him  can  be  ex- 
pected.    It  is  his  own  program.     On  the  other  hand,  so 
far  as  the  minority  is  concerned,  they  also  have  partici- 
pated in  the  work  of  the  committees  and,  to  a  certain  ex- 
tent, their  views  have  also  been  demonstrated.    And  even 
in  those  cases  where  they  differ  with  the  program  inade- 
quate opportunity  for  the  discussion  of  the  issue  thus 
presented  has  been  afforded  under  our  methods,  as  will 
be  shown  under  the  following  subdivision.     As  a  result, 
the  budget  debates  of  the  legislature,  after  the  appropria- 
tion bill  has  been  made  up,  have  become  formal  and  per- 
functory. 

(d)  Finally,  the  fact  that  no  program  for  consider- 
ation and  discussion  takes  form  until  the  legislature  itself 
makes  up  the  appropriation  bill,  tends  to  destroy  pub- 
licity and  opportunity  for  debate.    Instead  of  there  being 
an  entire  financial  program  laid  before  the  legislature 
by  a  responsible  executive  early  in  the  session  with  which 
every  citizen  in  the  state  can  familiarize  himself,  compar- 
ing its  items  with  the  corresponding  expenditures  of  pre- 
ceding years,  and  as  to  which,  therefore,  he  can  put  him- 
self in  a  position  to  understand  the  issues  and  debates,  no 
citizen  now  in  the  ordinary  course  learns  anything  of  any 

213 


BUDGETARY  REFORM  IN  THE  STATES 

program  until  the  Ways  and  Means  Committee  reports 
the  appropriation  bill  so  late  in  the  session  that  there  is  no 
opportunity  for  effective  suggestion  or  criticism.  The  bill 
has  then  received  the  approval  of  the  various  elements  and 
leaders  in  committee  and  the  subsequent  discussions  mean 
little.  This  evil  has  been  accentuated  by  the  misuse  of 
the  emergency  message,  under  which,  during  the  past 
twenty-one  years,  every  appropriation  bill,  except  one,  has 
been  hurried  through  in  the  final  hours  of  the  session 
without  the  necessity  even  of  being  printed  and  lying  on 
the  desks  of  members  for  three  days.  We  think  it  is  safe 
to  say  that  under  ordinary  conditions  not  only  is  the 
public  ignorant  of  the  items  of  appropriation  bills  until 
they  are  enacted  into  law,  but  the  same  ignorance  applies 
to  the  members  of  the  legislature  outside  of  the  one  or 
two  men  who  control  the  conduct  of  the  bill. 

It  is  therefore  almost  impossible  to  create  a  real  issue, 
a  real  debate,  on  the  subject  of  economy,  and  without  the 
publicity  of  such  an  issue  and  such  debate  your  commit- 
tee does  not  believe  that  real  economy  can  be  attained. 

III.     No  Complete  Financial  Program  or  Budget  Exists 

The  third  general  criticism  which  your  committee  makes  of 
our  present  system  is  that  nowhere,  either  in  the  legislature 
or  outside,  is  there  now  ever  formulated  or  made  public  a  really 
complete  financial  plan  or  budget.  Such  a  budget,  as  it  is  uni- 
versally understood  in  communities  or  institutions  which  prac- 
tice budget-making,  should  contain  the  following  essential 
elements : 

(1)  A  responsible  estimate  of  the  proposed  expendi- 
tures for  the  coming  fiscal  year. 

(2)  Financial  statements  of  the  current  resources  and 
liabilities  of  the  state,  including  its  debts  and  various 
funds,  and  including,  for  the  purpose  of  comparison,  a 
statement  of  its  current  expenditures  and  revenues  in  past 
years. 

(3)  A  proposition  of  the  new  measures  of  taxation, 
if  any,  which  will  be  necessary  to  meet  the  proposed 
expenditures  of  the  coming  year. 

To  see  how  far  short  we  fall  now  of  having  any  such  in- 
formation available  it  is  only  necessary  to  recall  the  issue 

214 


APPENDICES 

which  arose  last  winter  between  the  present  state  administra- 
tion and  its  predecessor  over  the  question  as  to  whether  a 
direct  tax  of  $18,000,000  was  needed.  When  it  is  recalled 
how  difficult  it  was  for  the  ordinary  citizen  to  determine  the 
rights  of  a  controversy  over  the  necessity  of  a  tax  amounting 
to  nearly  30  per  cent  of  the  total  revenues  of  the  state,  one  can 
form  some  conception  of  the  confusion  of  our  present  methods 
and  the  desirability  of  a  complete  annual  budget  scientifically 
prepared. 

IV.     The  Necessity  of  Restrictions  Against  Additions  to  the 
Budget  on  the  Floor  After  It  Is  Prepared 

The  fourth  general  criticism  which  your  committee  makes 
is  that  there  is  no  restriction  now  imposed  against  additions 
at  the  behest  of  individual  members  being  made  to  the  budget 
after  it  is  formulated  and  proposed  by  its  framers.  Your 
committee  believes  that  the  absence  of  such  restrictions  would 
be  fatal  to  any  budget  system.  The  spirit  of  mutual  accom- 
modation is  necessarily  so  strong  between  members  of  all  leg- 
islative bodies  that  without  protection  against  its  effect  the 
best-laid  program  of  financial  expenditure  is  liable  to  destruc- 
tion on  the  floor  of  the  Houses.  Your  committee  learned  of 
an  instance  last  winter  where  an  appropriation,  the  real  though 
not  ostensible  purpose  of  which  was  to  help  a  member  of  the 
legislature  to  re-election  in  his  own  district,  after  it  had  been 
rejected  by  the  Finance  Committee  of  the  Senate,  was  forced 
through  on  the  floor  of  that  body  by  the  united  vote  of  both 
parties,  the  leader  of  the  majority  and  the  leader  of  the  minor- 
ity alone  voting  against  it. 

Restrictions  against  such  increases  or  additions  exist  in  the 
legislature  of  all  other  English-speaking  countries.  They  orig- 
inated in  the  oldest  standing  rule  of  order  of  the  House  of 
Commons,  dated  July  n,  1713,  which  forbids  that  body  to 
raise  the  amount  of  items  presented  in  the  budget.  Similar 
restrictions  exist  in  the  constitution  of  the  Dominion  of  Can- 
ada as  they  did  in  the  constitution  of  the  Southern  Confed- 
eracy. They  are  a  familiar  and  most  successful  feature  of  the 
charters  of  all  the  largest  cities  of  this  state  and  your  com- 
mittee believes  they  embody  a  principle  which  is  indispensable 
to  successful  budget  practice.  This  principle  has  been  stated 
by  one  writer  as  follows : 

215 


BUDGETARY  REFORM  IN  THE  STATES 

"Upon  the  creation  of  just  such  a  situation  as  that,  the 
efficiency  of  representative  government  depends.  Its  es- 
sential principle  is  to  fix  the  representatives  so  that  they 
cannot  put  their  hands  into  the  till ;  they  will  keep  a  good 
watch  over  those  who  do  handle  the  money.  Congress- 
men will  take  a  very  different  view  of  pork  barrels  from 
that  now  held  when  they  can  no  longer  help  themselves 
to  the  pork."  (Ford  on  the  Cost  of  our  National  Gov- 
ernment, p.  115.) 

V.     The  Present  System  Reverses  the  Real  Relation  of  the 
Executive  to  the  Legislature  and  Surrenders  Important 
Powers  to  the  Executive 

Your  committee  further  finds  that  the  system  of  permitting 
the  governor  to  veto  items  in  appropriation  bills  prepared  by 
the  legislature  has  resulted  in  transferring  to  the  governor, 
to  a  large  extent,  the  historic  function  of  the  legislature  of 
holding  the  purse  strings  of  the  state.  The  present  system 
presents  a  singular  reversal  of  the  proper  relation  which  should 
maintain  between  the  executive  and  the  legislators.  Instead 
of  the  executive  coming  to  the  legislature  with  a  request  for 
funds,  which  it  is  the  province  of  the  legislature  to  pass  upon 
and  either  grant  or  refuse,  our  system  has  gradually  resulted 
in  the  legislature  presenting  to  the  executive  appropriation  bills 
which  he  is  expected  to  reduce.  Instead  of  the  man  who  is 
to  spend  the  money  presenting  to  the  body  which  is  to  grant 
the  money  his  request  for  their  final  decision,  the  latter  body, 
in  substance,  draw  their  check  in  blank  and  present  it  to  the 
executive  for  him  to  determine  how  much  of  it  he  cares  to 
use.  Your  committee  finds  the  present  system  has  resulted  in 
the  legislature,  under  pressure  of  local  and  individual  inter- 
ests, passing  many  appropriations  at  larger  figures  than  they 
believed  to  be  proper,  in  reliance  upon  the  hope  that  the  gov- 
ernor would  afterwards  prune  them  down  to  the  proper  dimen- 
sions. In  other  words,  our  attempt  to  accomplish  by  the  use 
of  the  executive  veto  what  elsewhere  has  been  accomplished 
by  the  legislative  rule  against  additions  to  the  budget  men- 
tioned under  subdivision  IV  above  has  very  nearly  resulted 
in  an  abandonment  to  the  executive  of  the  priceless  legislative 
function  of  holding  the  purse.  Our  legislatures,  instead  of 
placing  upon  themselves  during  their  own  deliberations  a  self- 

216 


APPENDICES 

denying  ordinance,  like  the  rule  of  the  House  of  Commons 
above  mentioned,  have  left  it  to  the  governor  to  make  the  nec- 
essary corrections  afterwards. 

Not  only  is  our  system  an  abandonment  of  essential  legisla- 
tive power,  but  it  is  open  to  other  grave  dangers  to  which  a 
proper  system  would  not  be  open.  Instead  of  presenting  his 
budget  at  the  beginning  of  the  session,  the  governor  uses  his 
veto  power,  after  the  session  is  over,  and  can  make  it  an  in- 
strument of  punishment  or  reward.  Instead  of  presenting  a 
public  plan  of  expenditures  and  revenue  which  can  be  sub- 
jected to  the  fullest  publicity  and  the  most  searching  scrutiny, 
and  where  an  attempt  to  recommend  expenditures  for  other 
motives  than  the  interest  of  the  state  as  a  whole  could  be  dis- 
covered and  discussed,  the  governor  exercises  his  veto  power 
in  a  series  of  disconnected  acts  under  circumstances  which 
make  such  discovery  less  easy. 

VI.     The  Present  System   Prevents  Any  Real  Defense  or 
Criticism  of  the  Budget  in  Public 

Finally,  as  a  result  of  our  present  method,  the  members  of 
our  legislature  are  deprived  of  adequate  opportunity  to  ask 
questions  in  public  concerning  the  estimates  of  the  men  who 
know  most  about  them. 

In  those  communities  where  the  budget  is  presented  by  the 
executive  to  the  legislature,  it  follows  as  a  natural  matter  of 
course  that  the  men  who  have  prepared  the  estimates  and  the 
financial  program  present  themselves  personally  before  the 
legislature  to  defend  and  to  be  examined  about  them.  The 
legislature  thus  has  an  opportunity  to  learn  at  first  hand  the 
propriety  of  the  requests  which  are  made  and  to  cross-examine 
the  men  who  make  them  under  such  circumstances  that  the 
public  can  get  a  clear  conception  of  the  strength  and  the  weak- 
ness of  any  proposed  budget.  Such  a  method  of  public  crit- 
icism can  accomplish  results  which  are  quite  impossible  to  our 
present  system  of  committee  work,  which,  at  best,  is  conducted 
without  effective  publicity. 


BUDGETARY  REFORM  IN  THE  STATES 

APPENDIX  2 

Summary  of  Findings  and  Recommendations  Relating  to 
State  Finances  and  Budget  Procedure  as  Submitted  to  the 
Survey  Committee  of  State  Affairs,  Colorado,  by  its  Staff, 
December,  1916. 

i.     Summary  of  Findings. 

The  study  of  state  finances  and  budget  procedure,  as  out- 
lined in  this  report,  has  necessarily  been  restricted  to  certain 
phases  of  the  subject  owing  to  the  very  short  time  available 
for  the  work.  It  is  believed,  however,  that  sufficient  ground 
has  been  covered  on  which  to  base  the  following  conclusions 
and  recommendations : 

a.  The  legislature,  in  its  handling  of  estimates  of  expendi- 
tures and  revenues,  and  compilation  of  the  data  for  the 
passing  of  appropriation  bills,  etc.,  is  assuming  each  bi- 
ennial period  a  function  which  is  inherently  executive 
and  not  legislative. 

b.  The  legislature  has  failed  to  perform  this  function  in 
the  manner  which  its  fundamental  importance  to  the 
business  of  the  state  government  demands.   The  legisla- 
ture cannot  do  otherwise  than  fail  in  this  without  tak- 
ing over  the  whole  executive  function  of  the  state. 

c.  The  members  of  the  legislature  are  in  the  main  unfitted 
by  training  and  experience  to  prepare  a  state  budget 
and,  as  nearly  as  can  be  gathered,  recognize  their  limita- 
tions in  this  respect  and  the  weaknesses  in  the  present 
system,  and  would  welcome  a  change  from  a  duty  which 
would  appear  to  have  been  thrust  upon  them  rather  than 
assumed  as  a  legislative  function. 

d.  Further,  even  if  the  legislature  were  competent  to  pre- 
pare a  state  budget  (which  is  an  almost  impossible  as- 
sumption,  from  the  short  period  of  its  session  and 
meeting  only  once  in  every  two  years  with  a  large  per- 
centage of  new  members),  it  would  be  putting  the  "cart 
before  the  horse"  and  would  encourage  lobbies,  and  sub- 
stitute irresponsible  influence  for  reason  and  sentiment 
for  fact,  and  guesswork  for  scientific  data. 

e.  Moreover,  the  present  practice  of  the  legislature  con- 
cerning the  preparation  of  a  state  budget  and  financial 
program  divides  responsibility  as  between  the  legisla- 

218 


APPENDICES 

ture  and  the  chief  executive  of  the  state,  whereas,  as  a 
matter  of  fact,  the  responsibility  under  this  system 
should  rest  entirely  on  the  legislature. 

f .  There  is  not  a  published  statement  or  report  anywhere 
in  the  state  government  showing  for  a  biennial  or  other 
period  the  exact  financial  status  of  the  government,  how 
much  it  costs  to  run  the  government  or  the  subdivisions 
thereof,  what  property  it  has,  or  how  much  is  spent 
for  salaries  alone  by  the  government  each  year. 

g.  It  is  difficult,  and  impossible  in  some  cases,  to  learn 
from  published  statements  or  reports  what  the  cost  of 
even  a  single  department  or  institution  of  the  govern- 
ment may  be  for  a  biennial  period.  *  *  * 

h.  The  central  accounting  system  of  the  government  is  an 
accounting  system  in  name  only.  Accounting  is  an  exact 
science.  The  only  exactness  in  the  central  accounting 
system  of  the  state  is  confined  largely  to  seeing  that 
cash  gets  into  the  proper  account  and  is  taken  out  of 
the  proper  account  in  accordance  with  law.  It  is  ab- 
solutely incapable  of  furnishing  the  data  necessary  to 
the  chief  executive  of  the  state  or  to  the  legislature  in 
the  preparation  of  a  budget  each  biennium  without  cost- 
ly analysis  of  fund  accounts,  vouchers,  etc. 

i.  The  handicaps  under  which  the  legislature  labors  (this 
is  the  only  branch  of  the  government  which  under  the 
present  organization  and  methods  appears  to  be  con- 
cerned with  the  facts  of  government  business  from  an 
executive  standpoint,  which  shows  the  anomaly  of  the 
situation)  are  insurmountable  in  any  effective  adminis- 
tration of  the  state  finances.  A  sound  accounting  sys- 
tem is  the  first  step  in  a  sound  and  efficient  financial 
policy. 

j.  The  law  classifying  appropriations  and  providing  for 
an  order  of  payment  thereof  is  largely  the  direct  cause 
of  excessive  appropriations,  i.  e.,  of  general  revenue  ap- 
propriations the  total  amount  of  which  for  a  biennium 
exceeds  usually  by  hundreds  of  thousands  of  dollars  the 
estimated  resources  to  pay  such  appropriations. 

k.  The  provisions  of  law  regulating  the  assessment,  levy- 
ing and  collecting  of  taxes,  and  also  the  legal  provisions 
establishing  the  fiscal  year  are  responsible  in  a  con- 
siderable measure  for  the  involved  condition  of  the  state 

219 


BUDGETARY  REFORM  IN  THE  STATES 

finances  and  the  diversity  in  funding  state  expenditures. 
The  legislature  is  passing  upon  appropriation  bills  and 
providing  for  the  fiscal  operations  of  the  biennial  period 
when  several  months  of  the  period  have  already  elapsed 
and  "short"  bills  are  necessary  in  the  interim.  All 
salaries  and  expenses  which  are  not  statutory  must  be 
held  up  pending  the  passage  of  relief  measures.  Fur- 
ther, general  property  taxes  for  a  fiscal  year  are  not 
collected  until  from  three  to  eight  months  after  the  fis- 
cal year  has  closed  for  which  they  are  collected  or  may 
be  applied.  This  delay  in  collecting  general  property 
taxes  has  cost  the  state  on  an  average  $35,000  a  year 
in  interest  charges  on  warrants  issued  against  the  gen- 
eral revenue  fund. 

The  levying  of  special  taxes  for  certain  departments  and 
institutions  and  the  practice  of  permitting  the  almost 
free  use  thereof  and  of  cash  receipts  is  practically  an 
outgrowth  of  the  defects  in  the  system  of  levying  and 
collecting  taxes,  inasmuch  as  these  departments  and 
institutions  are  not  restricted  to  fiscal  year  limitations 
in  the  application  of  their  special  tax  collections  or  of 
their  other  cash  receipts. 

I.  The  present  system  of  providing  revenues  from  several 
different  sources  for  funding  state  activities  is  directly 
responsible  for  lack  of  any  effective  central  auditing 
control  over  all  state  expenditures  or  of  any  standards 
governing  alike  the  expenditures  of  all  departments, 
boards  and  institutions.  It  is  very  easy  for  the  legisla- 
ture in  passing  special  appropriation  or  tax  levy  bills 
to  avoid  trouble  by  merely  stating  in  the  bills  that  the 
appropriations  or  levies  may  be  expended  for  certain 
broad,  general  objects  which  may  include  anything  and 
everything,  but  this  does  not  permit  of  any  real  auditing 
control  by  the  state  auditor. 


2.     Summary  of  Recommendations. 
Changes  Requiring  Legislative  Action. 

a.     A  budget,  as  the  term  is  defined  in  the  detailed  report 
on  state  finances  and  budget  procedure,  should  be  com- 
piled under  the  direction  and  supervision  of  the  gover- 
nor and  submitted  by  him  to  each  session  of  the  legis- 
220 


APPENDICES 

latnre  for  each  biennial  period.  In  order  that  the 
governor  may  be  able  to  carry  out  this  recommendation, 
it  is  suggested  that  there  be  created  for  the  purpose  a 
permanent  budget  and  efficiency  commissioner,  with  the 
necessary  expert  staff,  qualified  to  make  all  necessary 
studies  of  every  branch  of  the  state  government's  activ- 
ities with  the  object  of  using  the  results  of  such  studies 
in  the  revision  of  estimates  of  departments,  boards,  in- 
stitutions, etc.,  and  the  compilation  of  a  budget 

b.  All  estimates  for  expenditures,  regardless  of  the  sources 
of  funds  by  which  the  estimated  expenditures  may  be 
financed,  should  be  submitted  by  all  state  departments, 
boards  and  institutions  to  the  budget  and  efficiency  com- 
missioner acting  for  the  governor,  and  these  estimates, 
together  with  estimates  of  receipts  and  with  recommen- 
dations, should  be  compiled  by  the  commissioner  for 
the  information  and  action  of  the  governor. 

c.  That  the  state  auditor  should  establish  in  his  office  a 
system  of  accounting  and  classification  of  expenditures 
which  shall  give  the  facts  relating  to  the  business  of  the 
state  in  such  detail  as  will  avoid  unnecessary  analysis 
of  accounts  in  the  preparation  of  statements  of  costs 
and  other  statements  needed  by  the  chief  executive  or 
the  budget  and  efficiency  commissioner. 

d.  That  the  state  auditor  should  furnish  to  the  budget  and 
efficiency  commissioner,  acting  for  the  governor,  state- 
ments of  appropriations,  expenditures,  contract  or  other 
encumbrances,   for  the  biennial  period  preceding  the 
meeting  of  the  legislature,  together  with  statements  of 
estimated  revenue  for  the  succeeding  biennial  period. 

e.  The  commissioner  referred  to  should  be  empowered  to 
make  examinations  and  investigations  of  the  organiza- 
tion of  departments,  boards  and  institutions,  and  of  the 
methods  and  procedure  of  carrying  on  the  activities  of 
the  government,  not  necessarily  for  the  purpose  of  au- 
diting, but  for  the  purpose  of  making  recommendations 
for  promoting  economy  and  efficiency  in  the  state  gov- 
ernment. 

*     *     * 

Changes  Requiring  Constitutional  Amendment. 

a.     The  governor,  and  representatives  of  the  executive  de- 
partments, boards,  commissions  and  offices  designated 

221 


BUDGETARY  REFORM  IN  THE  STATES 

by  the  governor  to  appear  before  the  legislature,  should 
have  the  right,  and  when  requested  by  either  house  of 
the  legislature,  it  should  be  their  duty  to  appear  and 
be  heard  in  defense  or  explanation  of  any  budget  bill 
during  the  consideration  thereof. 

b.  Provisions  should  be  made  also  for  effective  executive 
control  by  the  governor  over  all  executive  departments, 
boards,  commissions  and  offices. 

c.  The  legislature  should  be  restricted  to  reducing  any  item 
in  the  governor's  budget  for  the  executive  branch  of 
the  government  and  be  not  permitted  to  raise  any  of 
those  items. 

d.  No  special  bill  making  an  appropriation  should  be  en- 
acted unless  special  provision  is  made  to  raise  the  rev- 
enue therefor. 

e.  All  appropriations  recommended  in  the  budget  should 
be  authorized  by  and  included  in  one  appropriation  act. 

f.  The  date  on  which  the  governor  shall  submit  his  "esti- 
mates'* (budget)  to  the  legislature  should  be  changed 
from  "the  commencement  of  each  session"   (Art.  IV, 
Sec.  8)  to  some  date  thereafter,  as  may  be  determined 
by  statute. 


APPENDIX   3 
BIBLIOGRAPHY 

Contents 

Items 

GENERAL    REFERENCES I-  31 

SPECIAL  REFERENCES,  BY  STATES 32-132 

NOTE 

The  following  bibliography  supplements  the  one  in  the  volume, 
The  Problem  of  a  National  Budget,  which  contains  general  refer- 
ences to  budgetary  reform  in  the  United  States  and  the  national 
government  in  particular.  The  two  together  give,  it  is  believed,  a 
substantially  complete  list  of  all  titles  relating  directly  to  the  move- 
ment for  budgetary  reform  in  the  United  States  so  far  as  the 
national  and  state  governments  are  concerned.  No  attempt  is  made 
to  include  references  to  budgetary  reform  in  municipalities  and 
counties,  though  this  subject  is  covered  to  a  certain  extent  by  the 
general  titles  listed.  Neither  is  any  attempt  made  to  list  such  docu- 
ments as  governors'  messages  in  which  the  budget  may  have  received 
incidental  mention.  Only  those  documents  of  this  character  have 
been  included  of  which  use  has  been  made  in  the  preparation  of  the 
present  work. 

GENERAL  REFERENCES 

1  Agger,  Eugene  E.     The  budget  in  the  American  com-  N 

monwealths.  New  York,  The  Columbia  university 
press,  1907.  218  p.  (Studies  in  history,  economics 
and  public  law,  edited  by  the  faculty  of  political  sci- 
ence of  Columbia  university,  vol.  XXV,  no.  2) 

Reviewed  in  American  political  science  review,  May,  1908, 
v.  2:  468-71. 

2  American  academy  of  political  and  social  science,  Phila- 

223 


BUDGETARY  REFORM  IN  THE  STATES 

delphia.  State  budgets.  {In  its  Annals,  Nov.,  1915, 
v.  62  147-112) 

[Contents:  The  proper  function  of  the  state  budget,  by 
S.  G.  Lowrie.  —  The  budgetary  provisions  of  the  New  York 
constitution,  by  C.  A.  Beard.  —  California's  state  budget,  by 
J.  F.  Neylan.—  The  Illinois  budget,  by  F.  F.  Bell.—  Budget 
methods  in  Illinois,  by  J.  A.  Fairlie.  —  State  budget  making 
in  Ohio,  by  W.  O.  Heffernan.  —  Financial  administration  of 
the  Commonwealth  of  Massachusetts,  by  E.  F.  Maling. 

Bates,  Frank  G.  Budgetary  laws  [enacted  in  1915  by 
Washington,  Vermont,  Nebraska,  North  Dakota  and 
Wisconsin]  American  political  science  review,  Nov., 
v.  9759-62. 


">4  Beard,  Charles  A.  What  a  budget  should  be.  New 
republic,  Feb.  17,  1917,  v.  10:  66-7. 

[Review  of  a  pamphlet  issued  by  the  Bureau  of  municipal 
research,  entitled  "The  elements  of  state  budget  making." 
The  budget  is  characterized  as  a  means  for  focusing  public 
attention  on  the  realities  of  administration.  It  is  the  be- 
ginning of  American  education  in  responsible  government] 

^5  Budgets;  federal,  state  and  local.  (In  Cyclopedia  of 
American  government.  New  York,  1914.  v.  i  : 

181,4) 

v  6  Bureau  of  municipal  research,  New  York,  Budget  leg- 
islation in  two  states.  Municipal  research,  Feb.,  1916, 
no.  70.  (XV,  1  02  p.) 

[Financial  legislation  in  New  Jersey  and  New  York  are 
the  main  topics  of  discussion  in  this  number  of  Municipal 
research.  An  appendix  contains  the  text  of  the  Edge  bill 
(New  Jersey)  the  Mills  and  Sage  bills  (New  York)  and 
correspondence  and  discussion] 

Y    7     -    The  elements  of  state  budget  making.     Munici- 
pal research,  Dec.,  1916,  no.  80,  p.  1-43. 

[Includes  preparation  and  consolidation  of  estimates,  con- 
tents and  arrangement  of  the  budget,  and  legislative  pro- 
cedure on  the  budget.  Reviewed  in  New  republic,  Feb.  17, 
1917,  v.  10  :  66-7] 

8    -     Three  proposed  constitutional  amendments  for 
control  of  the  purse.    Municipal  research,  May, 
no.  73.    86  p. 

224 


BIBLIOGRAPHY 

Contents:  Executive  versus  legislative  budget.  Alterna- 
tives before  Governor  Whitman.  The  Maryland  proposed 
constitutional  amendment  for  an  executive  budget.  The 
New  York  proposed  constitutional  amendments.  Appendix. 

9  Chase,  Harvey  S.  Proposed  reforms  in  state  govern- 
ments.  National  economic  league  quarterly,  Aug., 
1916,  v.  2 :  5-8. 

[This  paper  relates  mainly  to  the  state  budget,  and  the  pro- 
posed state  budget  for  Massachusetts] 

10  Cleveland,  Frederick  A.     The  application  of  scientific 

management  to  the  activities  of  the  state  .  .  .  Re- 
printed from  Addresses  and  discussions  at  the  Confer- 
ence on  scientific  management  held  Oct.  12-14,  1911. 
[Hanover,  N.  H.,  The  Amos  Tuck  school  of  adminis- 
tration and  finance,  Dartmouth  college]  1912.  p.  313- 

35- 

[The  value  of  the  budget  as  an  instrument  of  precision  for 
use  in  legislative  planning] 

11     What  a  budget  may  mean  to  the  administration.  v  ' 

(In  Illinois  University.     Conference  on  commercial 
education    and    business    progress,    1913.      Urbana- 
Champaign,  1913.    p.  35-50) 

[A  budget  requires  executive  leadership,  necessitates  execu- 
tive protection  against  criticism,  makes  a  general  system  of 
accounting  and  reporting  essential,  necessitates  the  develop- 
ment of  an  efficient  personnel,  and  requires  adaptation  of 
organization  to  work  to  be  done] 

12  Goodnow,    Frank    J.      Administration    and    financial  v 

methods  [in  relation  to  a  budget]  Municipal  research, 
June,  1915,  no.  62,  p.  365-92. 

[A  stenographic  record  of  the  discussion  of  state  financial 
methods  by  Dr.  Goodnow  and  the  New  York  Constitutional 
convention  committees  at  a  meeting  held  on  June  3,  1915] 

13     Informal  remarks  [on  the  budget]     (In  Govern- 
ors' conference.     Proceedings  of  the  ninth  meeting 
.  .  .  Washington,  D.  C,  Dec.  14-16,  1916,  p.  55-8) 
[Dr.  Goodnow  was  chairman  of  the  commission  which  was 
largely   responsible    for   the   Maryland   budget   amendment. 
In  these  remarks  he  emphasized  the  fact  that  the  presenta- 

225 


BUDGETARY  REFORM  IN  THE  STATES 

tion  of  a  comprehensive  plan  in  a  state  budget  system  in- 
volves reissuing  by  some  authority  which  has  the  interests 
of  the  state  as  a  whole  rather  than  those  of  a  particular 
department  or  locality] 

14  Holcombe,  Arthur  N.  [The  budget]  (In  his  State 
government  in  the  United  States.  New  York,  1916. 
P-  334-5,  452,  467,  474-5,  479) 

v  15  Lapp,  John  A.  State  administration  and  budget.  Gov- 
ernor's messages.  American  political  science  review, 
Nov.,  1916,  v.  10:  727-32. 

[Recommendations  regarding  the  budget  by  the  governors 
of  New  York,  Maryland,  Rhode  Island,  and  Massachusetts] 

- 

16  Lowrie,  Selden  G.  The  budget.  Madison,  Wis.,  Dem- 
ocrat printing  company,  state  printer,  1912.  259  p. 
tables  (part  fold.)  At  head  of  title:  Wisconsin  State 
board  of  public  affairs. 

[The  results  of  a  scientific  examination  of  the  budget  plans 
used  in  different  states  and  cities.  In  addition  to  setting 
forth  the  general  theory  of  budget  making,  the  budgetary 
procedure  of  England,  France,  Germany,  Belgium,  Switzer- 
land, Canada,  United  States  and  the  several  states  of  the 
United  States  are  described] 
w 

if  The  proper  function  of  the  state  budget.  Ameri- 
can academy  of  political  and  social  science.  Annals, 
Nov.,  1915,  v.  62:47-63. 

["The  proper  function  of  the  budget  is  not  the  reorgan- 
ization of  the  state  services,  but  the  presentation  and 
adoption  of  a  plan  in  fiscal  affairs  which  will  insure  the 
most  judicial  use  of  the  resources  of  the  state  for  the  pur- 
poses most  desired  by  the  citizens  of  the  state"] 

1 8    Suggestions  for  a  state  budget.    American  politi- 
cal science  review,  Feb.,  1913  (sup.)  v.  7:  88-93. 

Presented  at  the  meeting  of  the  American  political  science 
association,  Boston,  Dec.,  1912. 

19  Massachusetts,  Commission  to  compile  information  and 

data  for  the  use  of  the  Constitutional  convention. 
State  budget  systems  in  the  United  States.     Boston, 
Wright  &  Potter  printing  co.,  1917.    46  p.     (Massa- 
chusetts.   Constitutional  convention,  Bulletin  no.  2) 
226 


BIBLIOGRAPHY 

20  Mathews,  John  M.     The  state  budget.     (In  his  Princi- 

ples of  American  state  administration.  New  York, 
1917.  p.  284-93) 

21  North  Dakota.     Public  library  commission.     Legisla- 

tive reference  dept.    Budgetary  laws.    Comp.  by  I.  A. 
Acker,  legislative  reference  librarian  .  .  .  Bismarck, 
1912.    20  p.  (Bulletin  no.  3) 
[Summary  of  the  budget  laws  of  the  various  states] 

I 

22  Proposed  reforms  in  state  governments.     Discussion 

before  the  Economic  league  of  Boston,  Nov.  29,  1915. 
Addresses  by  Dr.  F.  A.  Cleveland,  Mr.  Richard  S. 
Childs,  Hon.  Edgar  T.  Brackett  and  J.  Franklin  Fort. 
National  economic  league  quarterly,  Aug.,  1916,  v.  2, 
p.  9-40. 

[Considerable  attention  is  given  in  these  papers  to  the 
question  of  a  budget] 

23  Ray,  P.  O.     State  budget  systems.    American  political 

science  review,  Feb.,  1917,  v.  n  :  111-4. 

[Provisions  of  the  three  state  budget  systems  which  were 
brought  into  operation  in  1916.  New  York  and  New  Jersey 
passed  budget  laws  and  Maryland  submitted  a  constitutional 
amendment  which  was  adopted  by  a  large  majority] 

Rider,  Harry  A.  State  budgets.  (In  his  Select  list  of 
references  on  national,  state,  county  and  municipal 
budgets  in  the  United  States.  American  academy  of 
political  and  social  science.  Annals,  Nov.,  1915,  v. 
62:  278-9) 

25  Sheldon,  Addison  E.   and  Keegan,   Myrtle.     Finance 

and  budget.  A  statement  of  probable  revenue  and  ex- 
penditure for  a  terminable  period,  with  financial  pro- 
posals for  that  period.  (In  their  Legislative  proce- 
dure in  the  forty-eight  states.  Lincoln,  1914.  p. 
20-5.  Nebraska.  Legislative  reference  bureau.  Bul- 
letin no.  3) 

26  Summary  of  budget  provisions  [in  14  states  prepared  by 

the  Massachusetts  commission  to  compile  information 
227 


BUDGETARY  REFORM  IN  THE  STATES 

and  data  for  the  Constitutional  convention]     Ameri- 
can political  science  review,  Aug.,  1917,  v.  n  :  541-4. 

•  27  U.  S.  Bureau  of  the  census.  Financial  statistics  of 
states,  1916.  Washington,  Govt.  print,  off.,  1917. 
127  p. 

28     Updyke,  Frank  A.     State  budgets.     American  political 
science  review,  Feb.,  1914,  v.  8:  57-61. 
[Current  legislation  in  Ohio,  New  York,  North  Dakota  and 
Illinois  which,  more  or  less,  affects  budgetary  methods  in 
those  states] 

r  29  Williams,  Robert  L.  The  functions  of  the  executive  de- 
partment relative  to  the  budget.  (In  Governors'  con- 
ference. Proceedings  of  the  eighth  meeting,  Boston, 
P-  50-5) 


30  Williamson,  C.  C.    Budget  reform.    National  tax  asso- 

ciation.   Bulletin,  March,  1916,  v.  i  :  51-3. 

[An  account  of  recent  legislation  governing  state  and  local 

budgets] 

31  -    State  budget  reform.     Case  and  comment,  Mar., 

1917,  v.  23:813-7. 

[A  brief  survey  of  state  budget  legislation  which  shows  how 
'American  states  are  attacking  the  problem  of  budget 
reform  all  along  the  line"] 


SPECIAL   REFERENCES,    BY    STATES 
ALABAMA 

32  Alabama.     General  assembly.    Legislative  investigating 

committee.  Report.  July  13,  1915.  Montgomery, 
Brown  printing  co.,  1915.  58  p.  (Doc.  no.  13,  1915) 
"State  budget  system,"  p.  5-7. 

CALIFORNIA 

33  California.     State  board  of  control.     Report.     1912 — 

date.     Sacramento,  1913 — date. 
228 


BIBLIOGRAPHY 

1912  has  title:  Report  of  the  State  board  of  control 
of  California  covering  appropriations  needed  by  state 
departments  and  institutions  for  the  sixty-fifth  and 
sixty-sixth  fiscal  years,  with  supplemental  recommen- 
dations. John  Francis  Neylan,  chairman. 
The  budget,  as  agreed  upon  by  the  state  controller 
and  the  State  board  of  control. 

34    Governor,  1911-1917  (Hiram  W.  Johnson)  Bi- 
ennial message  of  Governor  Hiram  W.  Johnson  to 
the  Legislature  .  .  .  1917.    Sacramento,  1917.    60  p. 
Budget  system,  p.  10-13. 

35  Neylan,  John  F.     California's  state  budget.     Ameri- 

can academy  of  political  and  social  science.  Annals, 
Nov.,  1915,  v.  62:  69-72. 

[The  Chairman  of  the  State  board  of  control  of  California 
tells  how  the  budget  idea  was  accepted  in  California  and 
sustained  by  public  opinion] 

COLORADO 

36  Colorado.    Survey  committee  of  state  affairs.    Reports 

.  .  .  Denver,  Brook-Haffner  press,  1916 — date. 

[The  Survey  committee  recommended  establishment  of  a 
permanent  budget  and  efficiency  commission.  Its  Report 
No.  6  is  entitled:  Report  on  a  study  of  state  finances  and 
budget  procedure] 

37 Summary  of  findings  and  recommendations 

relating  to  the  executive  branch  of  the  state  govern- 
ment of   Colorado  .  .  .   [Denver,    1916]      48  p. 
"State  finances  and  budget  procedure,"  p.  3-7. 

CONNECTICUT 

38    Connecticut.    State  board  of  finance.    Report  of  State 
board  of  finance  including  estimates  of  deficiencies  to 
Sept.  30,  1917  and  expenditures  for  two  years  end- 
ing Sept  30,  1919.    Hartford,  1916.    95  p. 
229 


BUDGETARY  REFORM  IN  THE  STATES 

[All  government  departments  and  institutions  are  required  to 
submit  their  estimates  of  expenditures  to  the  State  board  of 
finance  [budget  board]  which  compiles  them  for  publication 
by  the  Comptroller] 


ILLINOIS 

39     Illinois.     General  assembly.     Efficiency  and  economy 
committee.    Report  .  .  .   [Chicago,  The  Windermere 
press]  1914.    80  p. 
"Finance  administration,"  p.  33-73. 
["The  plan   for  organizing  a  department  of  finance  pro- 
posed that  there  should  be  a  state  comptroller,  appointed  by 
the  Governor,  who  should  be  charged  .  .  .  with  the  prepara- 
tion of  a  budget  of  revenues  and  expenditures  for  submis- 
sion to  the  Governor"] 

40 Report  .  .  .  Chicago  [The  Winder- 
mere  press]  1915.  1051  p. 

This  volume  includes  not  only  the  Report  of  the  Efficiency 
and  economy  committee,  consisting  of  80  pages,  but  also  16 
appendices  on  various  phases  of  state  administration. 

41  Legislative  reference  bureau.  Budget  classifica- 
tion and  rules  of  procedure  for  the  officers  of  the  sev- 
eral state  departments  for  filing  estimates  of  the 
appropriation  which  their  departments  may  require 
for  the  fiscal  period  1917-18  .  .  .  [Springfield, 
Schnepp  &  Barnes,  state  printers,  1916]  23  p.  incl. 
forms. 
Governor  Edward  F.  Dunne,  chairman. 

42 Detailed  budget  of  the  appropriations  re- 
quested for  the  biennium  1915-1916  to  1917-1918  filed 
with  the  Legislative  reference  bureau.  Springfield, 
111.,  Jeff er sons  printing  company  [1914-1917]  2  v. 

43  Bell,  Finley  F.  The  Illinois  budget.  American  acad- 
emy of  political  and  social  science.  Annals,  Nov., 
1915,  v.  62:  73-84. 

[The  Secretary  of  the  Illinois  Legislative  reference  bureau 
outlines  the  procedure  in  making  the  state  budget  and  some 
of  the  difficulties  which  had  to  be  met] 

230 


BIBLIOGRAPHY 

44  Bureau  of  municipal  research,  New  York.    A  suggested 

budget  procedure  for  the  state  of  Illinois.  Prepared 
for  a  joint  committee  of  the  Chicago  association  of 
commerce  and  the  Commercial  club,  by  the  Bureau  of 
municipal  research,  New  York.  March,  1917.  161 
numb.  1.  (typewritten) 

45  Fairlie,  John  A.     Budget  methods  in  Illinois.     Ameri- 

can academy  of  political  and  social  science.  Annals, 
Nov.,  1915,  v.  62:  85-90. 

46    A  report  on  revenue  and  finance  administration 

.  .  .   [Chicago,  The  Windermere  press,   1914]      103 
p.     (Illinois.    General  assembly.    Efficiency  and  econ- 
omy committee.    Report,  1914.     [Appendix  i]) 
[Recommends  an  integrated  administrative  system  with  the 
Governor  at  the  head,  which  would  pave  the  way  for  the 
introduction  of  a  budget] 

47  Frazer,  George  E.     A  report  on  the  accounts  of  the 

state  of  Illinois  .  .  .  prepared  for  the  Efficiency  and 
economy  committee  .  .  .  [Chicago,  The  Windermere 
press,  1914]  64  p.  (Illinois.  General  assembly.  Ef- 
ficiency and  economy  committee.  Report,  1914.  [Ap- 
pendix 2] ) 

"Accounting   needs   in   the   state   of   Illinois,"    [including 
statement  of  budget  proposals]  p.  38-64. 

INDIANA 

48  Indiana.    Board  of  accounts.    Budget  classification  and 

rules  of  procedure  for  departmental  estimates.  Is- 
sued Sept.  i,  1916.  Fort  Wayne,  1916.  20  p. 

49  Lapp,  John  A.     The  budget  system.     (In  Indiana  uni- 

versity bulletin,  Jan.  15,  1915,  v.  12:  no.  15,  144-51) 
["Indiana  can  well  afford  to  look  seriously  into  the  question 
of  adopting  a  budget  system  for  the  state  and  for  the  cities 
and  counties"] 

231 


BUDGETARY  REFORM  IN  THE  STATES 

IOWA 

50  Iowa.     General  assembly.     Committee  on  retrenchment 

and  reform.  Recommendations  of  the  Committee 
on  retrenchment  and  reform  of  the  thirty-fifth  General 
assembly  to  the  members  of  the  thirty-sixth  General 
assembly  and  the  general  public.  Des  Moines,  R.  Hen- 
derson, state  printer,  1914.  16  p. 

[One  of  the  recommendations  was  that  the  Governor  should 
present  a  budget  to  each  session  of  the  Legislature] 

51  —    Report  [issued  Nov.  12,  1914]     Des 
Moines  Register  and  leader,  Nov.  16,  1914. 

52  Horack,   Frank  E.      Reorganization  of   state  govern- 

ment in  Iowa.    Iowa  City,  la.,  State  historical  society 
of  Iowa,  1914.    88  p.     (Iowa  applied  history  series, 
ed.  by  B.  F.  Shambaugh.     [vol.  II,  no.  2] ) 
Published  also  in  American  political  science  review, 
May,  1915,  v.  9:  258-63. 

[Reviews  the  recommendations  of  the  Joint  committee  on 
retrenchment  and  reform  for  greater  economy  and  effi- 
ciency] 

KANSAS 

53  Kansas.     Efficiency  and  economy  committee.     Partial 

report  of  the  Efficiency  and  economy  committee  of 
Kansas.  Topeka,  Kansas  state  printing  plant,  1916. 
12  p. 

[The  Committee  recommended  a  plan  for  a  budget  for  the 
use  of  the  current  session  of  the  Legislature,  which  would 
be  a  start  toward  a  permanent  and  scientific  system  for  the 
future] 

LOUISIANA 

54  Louisiana.    Board  of  state  affairs.    Report  [containing 

the  experiences  of  1917  and  the  budget  for  1918  to 
1920  inclusive]  Baton  Rouge,  1918.  366,  37  p. 

["The  Board  of  state  affairs  is  a  true  budgetary  organ"  and 
its.  report  is  therefore  valuable  in  a  study  of  the  budget] 
232 


BIBLIOGRAPHY 
MARYLAND 

55  Maryland.    Commission  on  economy  and  efficiency.  Re- 

port of  the  Commission  on  economy  and  efficiency 
on  a  budget  system.  (In  Baltimore.  Dept.  of  legisla- 
tive reference.  The  Maryland  budget  amendment. 
[Baltimore,  1917]  p.  7-13) 

A  brief  report  of  the  Commission  was  also  published 
in  the  Senate  journal  of  Jan.  28,  1916,  p.  129-34. 

[This  Commission,  known  as  the  Goodnow  commission,  was 
approved  by  the  late  Democratic  convention.  It  recom- 
mended a  budget  system  and  drafted  a  constitutional  amend- 
ment to  provide  for  the  system  recommended,  which  was 
passed  March  28,  1916] 

56    Governor,  1916 — (Emerson  C.  Harrington)     The 

Maryland   state  budget   for  the  fiscal  years  ending 
Sept.  30,   1919  and  Sept.  30,   1920  .  .  .  Annapolis, 
Annapolis  publishing  co.,  1918.   39  p. 

57  Allen,  William  H.     Budget  amendment  of  the  Mary- 

land constitution.  National  municipal  review,  July, 
1917,  v.  6:  485-91. 

58  Baltimore.    Dept.  of  legislative  reference.    The  Mary- 

land budget  amendment.     Baltimore,  1917.     56  p. 

[Contains  amendment,  the  report  of  the  economy  and  effi- 
ciency commission  which  drafted  the  amendment,  and  the 
several  articles  prepared  by  the  members  of  this  commission 
in  explanation  of  the  amendment,  together  with  an  article  on 
the  state  budget,  by  Horace  E.  Flack. 

The  articles  by  members  of  the  Commission  are  reprinted 
from  the  Baltimore  Sun  and  bear  the  following  titles :  Need 
of  a  budget,  by  J.  A.  Pearse;  Gain  for  state  in  budget  plan, 
by  P.  D.  Laird;  Budget  system  merely  a  change  in  pro- 
cedure, by  F.  N.  Parke;  The  A-B-C  of  the  budget  plan, 
by  J.  D.  Baker ;  The  facts  causing  the  necessity  of  a  budget, 
by  B.  H.  Griswold,  Jr.;  A  simple  statement  of  the  budget 
plan,  by  Dr.  F.  J.  Goodnow] 

59  Chase,  Harvey  S.    The  budget  amendment  of  the  Mary- 

land constitution.  National  municipal  review,  May, 
1917.  v.  6:395-8. 

233 


BUDGETARY  REFORM  IN  THE  STATES 

60  Chase,  Harvey  S.  &  co.  (certified  public  accountants) 
Report  to  Hon.  Emerson  C.  Harrington,  comtproller 
of  the  treasury,  concerning  the  financial  condition  of 
the  state  of  Maryland,  and  also  concerning  a  proposed 
state  budget,  Dec.  15,  1915.  [Baltimore,  Dept.  of 
legislative  reference,  1915]  16  p. 

^/  6 1  Harrington,  Emerson  C.  The  executive  budget.  (In 
Governors'  conference.  Proceedings  of  the  ninth 
meeting  .  .  .  Washington,  D.  C.,  Dec.  14-16,  1916. 

P.  25-55) 

62     Maryland's    executive    budget    [and    appendix]. 

Municipal  research,  Dec.,  1916,  no.  80,  p.  44-63. 

[Address  delivered  by  the  Governor  of  Maryland  at  Con- 
ference of  governors,  Washington,  D.  C.,  Dec.  1916.  The 
appendix  consists  of  the  "Text  of  the  Maryland  budget 
amendment"] 

63  Institute  for  public  service,  New  York.     Serious  de- 

fects of  Maryland's  budget  law.  New  York  [1917] 
16  p. 

[A  critical  analysis  of  the  constitutional  amendment  provid- 
ing an  executive  budget.  The  comments  are  designed  to 
indicate  "why  other  states  should  not  enact  the  amendment 
as  it  stands  and  should  insist  upon  budget  provisions  that 
insure  a  fact  basis  for  estimates,  proper  explanations,  pub- 
lic hearings  and  adequate  publicity"] 

MASSACHUSETTS 

64  Massachusetts.    Commission  on  economy  and  efficiency. 

Report,  [ist]— 4th,  1912-1915.  Boston,  1913-1916. 
4v. 

[One  of  the  duties  of  the  Commission  was  to  "examine 
statements  submitted  to  it  by  the  Auditor,  showing  the  gen- 
eral and  special  appropriations  asked  for,"  and  to  "report 
thereon  to  the  General  Court." 

The  Commission  has  been  superseded  by  the  State  super- 
visor of  administration] 

65 Report  on  budget  procedure,  submitted  to 

the  governor,  Council,  and  General  court  by  the  Com- 
234 


BIBLIOGRAPHY 

mission  on  economy  and  efficiency.  May  27,  1916. 
Boston,  Wright  and  Potter  printing  co.,  state  printers, 
1916.  32  p.  ([General  court,  1916]  House.  [Doc.] 
2288) 

["A  constructive  program  for  systematizing  and  simplifying 
the  administration  of  the  state's  finances"] 

66 Report  on  the  administration  of  state  reve- 
nues and  loans  .  .  .  April  29,  1916.  Boston,  1916. 
102  p.  (House  ...  no.  2225) 

["This  report  raises  a  number  of  important  questions  which 
should  be  considered  before  a  satisfactory  budget  procedure 
can  be  adopted.  One  of  these  questions  is :  To  what  extent 
are  the  state's  revenues  now  controlled  by  appropriations, 
and  to  what  extent  are  they  expended  without  being  appro- 
priated? This  matter  was  investigated  and  is  discussed  at 
length] 

67    General  court.     Joint  special  recess  committee  on 

finance  and  budget  procedure.     Preliminary  budget 
plan  for  financing  the  Commonwealth  for  the  fiscal 
year  1918  ...  Jan.,  1918.     Boston,  Wright  &  Pot- 
ter printing  co.,  state  printers,  1918.    72  p.     (House 
...  no.  17) 

68    Supervisor    of    administration.    \  Annual    report 

.  .  .  1916 — Boston,  1917 — 

69  Boston.    Chamber  of  commerce.    Special  committee  on 

state  budget  system.  A  state  budget  system;  report 
....  [Nov.  24,  1916]  [Boston,  1916]  8  p. 

70  Chase,  Harvey  S.    The  executive  budget.     Boston  city 

club.    Bulletin,    March  i,  1917.    p.  230-6. 

[The  author  outlines  his  ideas  as  to  what  provisions  should 
be  included  in  any  amendment  to  the  Massachusetts  consti- 
tution intended  to  secure  the  installation  of  an  effective 
budget  system] 

71  Maling,   Ernest   H.     Financial   administration   of   the 

Commonwealth  of  Massachusetts.  American  academy 
of  political  and  social  science.  Annals,  Nov.,  1915, 
v.  62 :  101-12. 

235 


BUDGETARY  REFORM  IN  THE  STATES 

["A  budget,  in  the  sense  of  a  comprehensive  financial  plan 
with  recommendations  for  all  classes  of  expenditure  and  a 
plan  of  financing  them,  has  never  been  prepared"] 

72  A  state  budget  [for  Massachusetts]     National  economic 

league  quarterly,  Aug.,  1916,  v.  2 :  54-60. 
Includes:     Extracts  from  a  report  to  Governor  McCall,  of 
Massachusetts,  dated  Jan.  12,  1916,  by  H.  S.  Chase';  first 
draft  of  an  amendment  to  the  constitution  relating  to  a 
state  budget. 

MICHIGAN 

73  Michigan.     Constitutional  convention.     [Discussion  on 

state  budget]  (In  its  Proceedings  and  debates. 
Lansing,  1907.  v.  i:  738-45) 

74  Heineman,  David  E.    Michigan's  need  of  a  budget  sys- 

tem for  taxation;  an  address  delivered  at  the  fifth 
conference  of  the  Michigan  state  tax  association  at 
Grand  Rapids,  March  2,  1916.  .  .  .  [Detroit,  1916] 

13  P- 

"Published  in  the  Grand  Rapids  press  of  March  2,  1916,  in 
the  Michigan  manufacturer  of  March  n,  1916,  in  the 
National  tax  association  bulletin  for  May,  1916,  and  in 
volume  V  of  the  Proceedings  of  the  Michigan  state  tax 
association,  from  which  this  pamphlet  is  reprinted." 

75  Russell,  J.  A.    The  budget  system.     (In  Michigan  state 

tax  association.    Proceedings,  1917.    p.  35-53) 


MINNESOTA 

76  Minnesota.  Efficiency  and  economy  commission.  The 
budget  system  in  appropriations.  (In  its  Preliminary 
report.  St.  Paul  [1914]  p.  18-21) 
[Recommendation  that  the  Governor  consolidate  and  revise 
estimates  submitted  to  him  by  the  heads  of  departments  and 
services  of  the  Government,  and  that  he  submit  these  revised 
estimates  to  the  Legislature] 

77 Final  report  of  the  Efficiency  and  economy 

commission :  a  proposed  bill  for  reorganizing  the  civil 
administration  of  the  state  of  Minnesota,  the  merit 
236 


BIBLIOGRAPHY 

system  in  civil  service,  the  budget  system  in  appro- 
priations, with  prefatory  statement,  annotations,  and 
explanatory  notes.  St.  Paul,  Minn.,  Office  of  the 
Commission  [1914]  89  p.  diagrs. 

"The  budget  system  in  appropriations,"  p.  18-21,  41-43. 
[The    Commission   recommended   that   provision   should   be 
made  by  law  for  the  submission  by  the  Governor  of  a  bien- 
nial budget] 

78  Hess,  Ralph  H.    The  cost  of  government  in  Minnesota 

and  analysis  of  municipal  receipts  and  disbursements 
.  .  .  being  chapters  XXII  and  XXIII  of  the  Second 
biennial  report  of  the  Minnesota  tax  commission. 
Saint  Paul,  Minn.,  1910.  4,  229-304  p.  incl.  tables. 

79  Young,  J.  E.    Administrative  reorganization  in  Minne- 

sota. American  political  science  review,  May,  1915, 
v.  9 :  273-86. 

"The  budget  system,"  p.  282-4.  The  Efficiency  and  economy 
commission  gave  careful  attention  to  the  budget  system,  "so 
universally  neglected  in  our  states." 

NEBRASKA 

80  Nebraska.    Legislature.    Joint  committee  on  reform  of 

legislative  procedure.  Reform  of  legislative  proce- 
dure and  budget  in  Nebraska;  a  report  by  Joint  com- 
mittee of  Senate  and  House,  authorized  by  Legisla- 
ture of  1913  .  .  .  [Lincoln,  J.  North  &  co.,  printers] 
1914.  47  p.  incl.  tables.  (Nebraska.  Legislative  ref- 
erence bureau.  Bulletin  no.  4) 


NEW  JERSEY 

8 1  New  Jersey.  Economy  and  efficiency  commission.  Mes- 
sage of  the  governor  transmitting  report [s]  of  the 
commission  to  consider  best  means  to  consolidate  state 
agencies  .  .  .  Trenton,  N.  J.,  MacCrellish  &  Quigley, 
state  printers,  1913-1916.  4  v. 
237 


BUDGETARY  REFORM  IN  THE  STATES 

["Though  this  Commission  did  not  directly  concern  itself 
with  the  question  of  a  budget,  the  creation  of  an  integrated 
scheme  of  administrative  services  constitutes  an  essential 
part  of  the  problem  of  establishing  a  budgetary  system"] 

8ia  Governor.     Budget  message  of  Walter  E.  Edge 

.  .  .  transmitting  to  the  1420!  session  of  the  Legisla- 
ture recommendations  for  state  expenditures  for  the 
fiscal  year  beginning  Nov.  I,  1918  and  ending  Oct.  31, 
1919.  [Trenton]  1918.  136  p. 

82    Legislature.     Senate.     Committee  to  investigate 

state  expenditures.    Report  [and  testimony]  Trenton, 
[1895]?    [1000]?    p. 

Report  is  also  found  in  Senate  journal  of  1895,  ?•  73I~53- 
[The  Committee's  recommendation  that  all  appropriations 
for  a  year  should  be  made  in  a  single  appropriation  bill 
resulted  in  the  act  of  1895  providing  for  a  single  appropria- 
tion bill] 

83  Bureau  of  municipal  research,  New  York.     Financial 

legislation  in  New  Jersey.     Municipal  research,  Feb., 

1916,  no.  70,  p.  1-17. 

[Interesting  history  of  the  movement  for  the  correction  of 
financial  evils  which  culminated  in  the  passage  in  1916  of 
the  Edge  budget  bill] 

83a  New  Jersey  state  chamber  of  commerce.  Bureau  of 
state  research.  The  operation  of  the  New  Jersey 
budget  law.  Newark,  1917.  38  p.  (State  research, 
sec.  3,  sup.  to  vol.  V,  "New  Jersey,"  no.  i,  October, 

1917.  Consecutive  no.  4) 

NEW  YORK 

84  New  York  (State)     Committee  of  inquiry  to  investi- 

gate administration  of  state  government.  Report  of 
the  Committee  of  inquiry  to  Governor  William  Sulzer 
.  .  .  Transmitted  to  the  Legislature  March  24,  1913. 
Albany,  J.  B.  Lyon  company,  printers,  1913.  7,119  p. 
fol.  d.  tables. 

Includes,  also,  "Message  from  the  governor  trans- 
238 


BIBLIOGRAPHY 

mitting  report  of  the  Committee  of  inquiry":  (7  p.) 
["The  Committee  recommends  the  establishment  of  a  De- 
partment of  efficiency  and  economy  .  .  .  and  a  systematic 
business  and  financial  management  of  the  state's  business  and 
financial  affairs"] 

85     Constitutional  convention,  1915.     Joint  meeting  *** 

of  the  Committee  on  governor  and  other  state  officers, 
and  Committee  on  finance,  with  Hon.  A.  Lawrence 
Lowell,  president  of  Harvard  university  .  .  .  Albany, 
1915.  50  p.  (Doc.  no.  14) 

[The  report  of  this  meeting  was  also  published  in  Municipal 
research,  June,  1915,  No.  62,  p.  392-422.  Dr.  Lowell  dis- 
cussed the  relation  of  English  experience  ...  to  the  fi- 
nancial problems  before  the  convention] 

86 Joint  meeting  of  the  governors  and  other 

state  officers  and  the  Committee  on  state  finances, 
revenues  and  expenditures,  with  Hon.  Frank  J.  Good- 
now,  president  of  John  Hopkins  university.  Albany, 
1915.  45  p.  (Doc.  no.  13) 

Published  also  in  Municipal  research,  June  1915,  no.  62,  p. 
365-92,  under  the  title:  Administration  and  financial 
methods,  by  Dr.  Frank  J.  Goodnow. 

87 Minority  report  on  the  proposed  budget 

system  for  the  state.  Albany,  1915.  5  p.  (Doc. 
no.  35) 

88 Report  of  the  Committee  on  state  finances,  ~ 

revenues  and  expenditures,  relative  to  a  budget  system 
for  the  state.    Albany,  1915.    22  p.     (Doc.  no.  32) 
Published  also  in  Municipal  research,  June,   1915,  no.  62, 
p.  423-47- 

89    Constitutional  convention  commission.    The  con-  "' 

stitution  and  government  of  the  state  of  New  York,  an 
appraisal  .  .  .  [New  York]  Bureau  of  municipal 
research,  1915.  246  p. 

Published  also  in  Municipal  research,  May,  1915. 
[A  critical  appraisal  which  pointed  out  the  multiplicity  of 
services  and  the  need  for  the  establishment  of  a  budgetary 
system   as   a   means    for    currently    coordinating   and    con- 
trolling their  activities] 

239 


BUDGETARY  REFORM  IN  THE  STATES 

90    • Dept.  of  efficiency  and  economy.    Annual  report. 

1914-1915.     Albany,   1915.  5  v.  diagrs.    (part  fold.) 

[Among  the  duties  of  the  Commission  was  to  recommend 
concerning  the  estimates] 

V  91 Budget  report  of  the  New  York  Depart- 
ment of  efficiency  and  economy  concerning  appropria- 
tions requested  by  the  state  departments,  institutions, 
boards  and  commissions.  Transmitted  to  the  Legis- 
lature January  21,  1915.  Albany,  J.  B.  Lyon  com- 
pany, printers,  1915.  995  p.  incl.  tables.  [Annual  re- 
port, 1914.  v.  i] 

<   92 Government  of  the  state  of  New  York.    A 

description  of  its  organization  and  functions.  Pre- 
pared for  the  New  York  State  constitutional  conven- 
tion commission  by  the  New  York  State  department 
of  efficiency  and  economy  and  New  York  Bureau  of 
municipal  research.  January  i,  1915  .  .  .  [Albany, 
J.  B.  Lyon  company,  printers,  1915]  768  p.  diagrs. 
(part  fold.)  [Annual  report,  1914,  v.  2] 

[This  study  paved  the  way  for  the  consideration  of  the 
problem  of  budgetary  reform] 


93 State  budget  report  by  Department  of  ef- 
ficiency and  economy.  Appropriations  recommended 
for  fiscal  year  beginning  October  i,  1914.  Explana- 
tory notes  by  heads  of  departments,  critical  notes  and 
analytical  tables  by  Department  of  efficiency  and  econ- 
omy. Transmitted  to  the  governor  March  16,  1914. 
[Albany,  1914]  262  p. 

94    G  over  nor ,  1915 — (Charles  S.  Whitman)     The 

governor's  budget  conference  revision  of  desired  ap- 
propriations by  the  state  departments,  institutions  and 
commissions,  showing  the  departmental  requests  sub- 
divided and  scheduled  under  the  conference  classifica- 
tions for  salaries  and  wages  and  other  expenditures 
240 


BIBLIOGRAPHY 

for  the  fiscal  year  of  1916-1917  .  .  .  [Albany,  1916] 
420  p. 

Transmitted  to  the  Legislature  by  the  governor  as  an  exhibit 
in  connection  with  the  tentative  state  budget  proposal,  Janu- 
ary 5,  1916. 

95     ---    The  governor's  budget  estimate,  trans- 
mitted to  the  Legislature  January  3,  1917.     [Albany, 
75  P- 


96  ---    The  governor's  compilation  of  appro- 

priations desired  by  the  state  departments,  institu- 
tions and  commissions,  showing  the  departmental  re- 
quests subdivided  and  scheduled  under  the  governor's 
classifications  for  salaries  and  wages  and  other  expen- 
ditures for  the  fiscal  year  1917-1918  .  .  .  [Albany, 
1917]  701  p. 

Transmitted  to  the  Legislature  by  the  governor  as  an  exhibit 
in  connection  with  the  tentative  appropriation  act,  January 
3,  1917- 

97  ---    The  governor's  tentative  appropria- 

tion act  for  1917-18,  transmitted  to  the  Legislature 
January  3,  1917.  [Albany,  1917]  714  p. 

98  ---    Tentative  budget  proposals  for  1916- 

17,  transmitted  by  the  governor,  January  5,  1916. 
[Albany?]  1915.  603  p. 

Governor  C.  S.  Whitman  presented  a  summary  of  the  pre- 
vious year's  appropriations  and  current  departmental  re- 
quests, etc. 

99  -    Legislature.     Budget  committee.     Requests  for 

appropriations  to  be  made  at  the  1917  session  of  the 
Legislature  as  they  have  been  filed  with  the  Legisla- 
tive budget  committee.  Albany,  J.  B.  Lyon  company, 
printers,  1916.  568  p.,  I  1.,  432  p. 

100     Alexander,  Margaret  C.     Institution  of  an  executive 
budget.     (In  her  Development  of  the  power  of  the 
state  executive  .  .  .  with  special  reference  to  the  state 
241 


BUDGETARY  REFORM  IN  THE  STATES 

of  New  York.  Northampton,  Mass.,  1912.  p.  215- 
26.  Smith  College  studies  in  history,  v.  2,  no.  3, 
April,  1917) 

1 01  Beard,  Charles  A.     The  budgetary  provisions  of  the 

New  York  Constitution.  American  academy  of  politi- 
cal and  social  science.  Annals,  Nov.,  1915,  v.  62: 
64-72. 

102  Budget  systems,  a  discussion  before  the  New  York  con- 

stitutional   convention.      Municipal    research,    June, 

1915,  no.  62.     IV,  251-447  p. 

[Includes  "Proposed  constitutional  amendment  to  provide  a 
state  budget  system";  discussion  by  Hon.  John  G.  Saxe, 
Dr.  F.  A.  Cleveland,  Hon.  J.  J.  Fitzgerald,  Dr.  F.  J.  Good- 
now,  and  Dr.  A.  Lawrence  Lowell;  report  of  Committee 
on  finance] 

103  Bureau  of  municipal  research,  New  York.     Financial 

legislation  in  New  York.     Municipal  research,  Feb., 

1916,  no.  70,  p.  19-58. 

[Reviews  conditions  preceding  agitation  for  a  budget  pro- 
cedure, and  discusses  provisions  of  the  Sage  and  Mills 
budget  bills,  the  Bennett  resolution,  and  the  Wagner  pro- 
posal] 

104    Memorial  to  the  Legislature  and  correspondence 

with  the  Governor.     Municipal  research,  Jan.,  1916, 
no.  69,  p.  68-92. 

[Recommends  amendment  to  the  Legislative  and  executive 
laws  of  New  York  providing  for  budget  procedure.  Draft 
of  proposed  amendment  follows  the  correspondence] 

105     The  New  York  state  legislative  budget  for  1917. 

Municipal  research,  June,  1917,  no.  86.     (X,  140  p.) 

1 06  Cleveland,  Frederick  A.     Constitutional  provision  for 

a  budget  [with  discussion,  by  C.  D.  Norton]  (In 
Academy  of  political  science,  New  York.  Proceed-1 
ings,  Oct.,  1914,  v.  5:  I4I-92) 

Reprinted  by  the  New  York  State  Constitutional  conven- 
tion commission  in  a  volume  entitled:  The  revision  of  the 
state  constitution. 

242 


BIBLIOGRAPHY 

107    Exposition  of  the  proposed  constitutional  amend- 
ment  [for  the  state  of  New  York]     Municipal  re- 
search, June,  1915,  no.  62,  p.  267-98. 

1 08    A  state  budget,  constructive  proposals  to  be  sub- 
mitted to  the  state  constitutional  convention    [with 
discussion  by  C.  D.  Norton  and  appendix]     Munici- 
pal research,  Feb.,  1915,  no.  58,  p.  147-98. 
Reprinted  from  the  Proceedings  of  the  Academy  of  politi- 
cal science,  New  York,  vol.  5. 

109  Lowell,  A.  Lawrence.     Financial  administration  with 

special  reference  to  English  experience.  Municipal 
research,  June,  1915,  no.  62,  p.  393-422. 

["In  view  of  President  Lowell's  special  study  of  English 
government,  he  was  requested  by  the  [New  York]  Consti- 
tutional convention  committees  ...  to  discuss  with  them 
the  relation  of  English  experience  ...  to  the  financial 
problems  before  the  convention"] 

1 10  Proposed  budget  system  of  New  York  state.    Editorial. 

Journal  of  accountancy,  Oct.,  1915,  v.  20:  299-301. 

in  Proposed  constitutional  amendment  to  provide  a  state 
budget  system  [in  New  York  state]  Municipal  re- 
search, June,  1915,  no.  62,  p.  251-5. 

112  Saxe,  John  G.     Exposition  of  the  proposed  constitu- 

tional amendment  [for  New  York  state]  Municipal 
research,  June,  1915,  no.  62,  p.  256-66. 

[This  exposition  was  made  before  the  committee  of  the 
constitutional  convention  on  finances,  revenues  and  ex- 
penditures on  June  24,  1915.  Mr.  Saxe  was  a  member  of 
the  Constitutional  convention] 

113  Schultz,  Birl  E.     The  history  of  appropriations  in  the 

legislative  session  of  1916,  New  York  state.  Munici- 
pal research,  April,  1916,  no.  72,  (v,  134  p.) 

Also  privately  printed  as  Doctor's  dissertation,  Columbia  uni- 
versity, 1916. 

[Story  of  the  controversy  between  the  legislature  and  Gov- 
ernor Whitman,  describing  the  actual  procedure  of  the  legis- 
lature on  appropriation  bills  of  1916  and  action  on  the 
Governor's  budget  proposal] 

243 


BUDGETARY  REFORM  IN  THE  STATES 

114  State  administration,  discussions  of  proposed  amend- 

ments for  the  reorganization  of  the  executive  branch 
before  the  New  York  State  constitutional  convention. 
Municipal  research,  July,  1915,  no.  63.  (X,  449- 
630  p.) 

115  Where  Governor  Whitman's  budget  falls  short.     New 

republic,  Jan.  29,  1916.  v.  5:  321-2. 

[Criticism  directed  against  the  Governor  for  his  failure  to 
press  the  issue  upon  the  legislature] 

NORTH  DAKOTA 

116  North  Dakota.     Budget  board.     Report  of  the  North- 

Dakota  Budget  board.  Appropriations  requested  and 
allowed  1915-1917.  Appropriations  requested  and 
recommended  1917-1919  .  .  .  Bismarck,  N.  D., 
Tribune  printing  co.,  state  printers  and  binders,  1917. 
160,  in  p. 

OHIO 

117  Ohio.     Budget  commission.     Budget  classifications  and 

rules  of  procedure  for  1915,  1915-1916,  and  1916- 
1917.  Departmental  estimates.  Issued  by  W.  O.  Hef- 
fernan,  state  budget  commissioner  .  .  .  October  ist, 
1914.  Columbus,  O.,  The  F.  J.  Heer  printing  co., 
1914.  36  p. 

118 Budget  code  and  explanations  .  .  .  Sep- 
tember first,  nineteen  sixteen.  Columbus,  O.,  The  F. 
J.  Heer  printing  co.,  1916.  42  p. 

On  cover:  Guide  for  making  departmental  budgets  and 
interpreting  the  scope  of  appropriation  items  1917.  Ohio. 

The  budget.    State  of  Ohio.    February  1 6, 

1915  to  June  30.,   1915.     July  i,   1915  to  June  30, 
1916.     July  I,  1916  to  June  30,  1917.     8ist  General 
assembly.    W.  O.  Heffernan,  commissioner.     Colum- 
244 


BIBLIOGRAPHY 

bus,  O.,  The  F.  J.  Heer  printing  company,  1915.  372 
p.  incl.  tables. 

1 20 Guide  for  making  departmental  budgets 

and  interpreting  the  scope  of  appropriation  items. 
Columbus,  1917.  42  p. 

121 Report  of  the  budget  commissioner,  together 

with  departmental  estimates  and  budget  commission- 
er's recommendations.  Columbus,  O.,  1917.  336  p. 
diagrs. 

122    Governor,  ipi5 — (James  M.  Cox)     Executive 

budget  for  the  fiscal  year  1917  and  the  fiscal  year 
1918.     Columbus,  1917.     163  p. 

123  Fullington,  E.  M.    The  budget  system  in  Ohio.     [An 

address  delivered  at  the  National  auditors'  conven- 
tion, Salt  Lake  City,  Aug.  21,  1915]  Journal  of  ac- 
countancy, Feb.,  1916,  v.  21 :  114-24. 

124  Heffernan,  W.  O.    State  budget  making  in  Ohio.  Amer- 

ican academy  of  political  and  social  science.  Annals, 
Nov.,  1915,  v.  62:  91-100. 

[The  Ex-Budget  commissioner  of  Ohio  discusses  the 
original  status  of  financial  procedure  in  Ohio,  makes  sug- 
gestions regarding  a  budget,  and  praises  the  Governor  of 
Ohio  for  making  possible  the  modern  fiscal  system  now 
enjoyed  by  Ohio] 

( 
OREGON 

125  Oregon.     Secretary  of  State.     Estimate  of  expendi- 

tures (budget)  1915-1916,  1917-1918.  [Salem,  Or., 
1914 ?-i6]  2  v. 

PENNSYLVANIA 

126  Pennsylvania.      Economy   and   efficiency    commission. 

Report  of  the  Solicitor  of  the  Economy  and  efficiency 
commission  .  .  .   [Harrisburg]  1917.    72  p. 
[The   Solicitor  recommends  that  a  single  State  board  of 
245 


BUDGETARY  REFORM  IN  THE  STATES 

finance  and  revenue  be  created,  which  shall  have  the  duty  of 
preparing  and  submitting  a  report  on  estimates  and  appro- 
priations. This  will  bring  before  the  Legislature  the  im- 
portance of  the  question  of  budgetary  reform] 

VERMONT 

127  Vermont.    Committee  on  budget.    Report,  fiscal  years 

ending  June  30,  1918  and  1919.  Montpelier,  Capi- 
tal city  press  [1916]  7  p. 

VIRGINIA  j 

128  Virginia.      Commission    on    economy    and    efficiency, 

Budget  system.  (In  its  Report.  Richmond,  1918, 
P-  26-33) 

129    Governor,  1918 — (Westmoreland  Davis)  Execu- 
tive budget.     (In  his  Inaugural  address,  February  I, 
1918.    Richmond,  1918.    p.  4-5) 

WASHINGTON 

130  Washington   (State)     State  board  of  finance.     State 

board  of  finance  budget  submitted  to  the  Legislature, 
1917-  Olympia,  F.  M.  Lamborn,  public  printer,  1916 
— date. 

WEST  VIRGINIA 

131  West  Virginia.    Governor,  1913-191?  (Henry  D.  Hat- 

field)  Second  biennial  message  of  Governor  Hatfield 
to  the  legislature  of  1917.  Charleston,  1917.  145  p. 
"Our  budget  system,"  p.  6-9. 

WISCONSIN 

132  Wisconsin.    State  board  of  public  affairs.    Wisconsin 

state  budget,  showing  actual  receipts  and  disburse- 
ments for  1913-1914,  1914-1915,  and  1915-1916,  and 
246 


BIBLIOGRAPHY 

estimated  receipts  and  disbursements  for  1916-1917, 
1917-1918,  and  1918-1919.  Comp.  for  the  use  of  the 
Legislature  of  1917  .  .  .  December  i,  1916.  [Madi- 
son? 1916]  i  p.  1.,  344  p. 

Autographed  from  type-written  copy. 

In  pocket:  "Recommendations  of  the  Board  of  public 
affairs  on  the  budgets  of  the  boards,  departments,  and  com- 
missions, as  submitted  for  the  consideration  of  the  1917 
Legislature."  (22  p.) 


INDEX 


Accounting   and   reporting,   uni-      Budgetary     Provisions     of    the 


form  system  should  be  estab- 
lished for  all  state  services,  13, 
186. 

Accounts  of  the  State  of  Illinois, 
by  G.  E.  Frazer,  48. 

Administrative  system,  integra- 
tion of,  necessary  for  budget- 
ary reform  in  the  states,  12. 

Alabama  Committee  on  Finance 
and  Taxation,  appointment, 
1 68;  report  relating  to  govern- 
mental operations,  168. 

Arizona  budget  act,  168-170;  de- 
partmental estimates  submitted 
in  compiled  form,  but  with  rec- 
ommendation of  compiling  au- 
thority, I78n;  dummy  budget 
bill  transmitted  with  budget, 
197.. 

Arkansas  budget  act,  170-171 ; 
departmental  estimates  sub- 
mitted in  compiled  form,  but 
with  recommendation  of  com- 
piling authority,  I78n. 

Beard,  C.  A.,  on  budgetary  re- 
form in  New  York,  155. 

Budget,  The  (Wisconsin),  by  S. 
G.  Lowrie,  cited,  103,  104. 

Budget  and  the  Legislature,  The, 
by  R.  E.  Miles,  cited,  75. 

''Budget  bill,"  states  providing 
'  for,  197. 

Budget  Methods  in  Illinois,  by 
J.  A.  Fairlie,  cited,  45,  46,  47. 


New  York  Constitution,  The, 
by  C.  A.  Beard,  cited,  155, 
156. 

Bureaus  of  municipal  research, 
creation  of,  to  improve  meth- 
ods of  municipal  administra- 
tion, 5;  budgetary  systems  se- 
cured through  help  of,  6,  7. 

California  State  Board  of  Con- 
trol, act  creating,  85-94;  work 
in  revising  estimates,  84;  prep- 
aration of  budget,  181,  190. 

California  State  Budget,  by  J.  F. 
Neylan,  cited,  82. 

Chase,  H.  S.,  report  concerning 
financial  condition  of  Mary- 
land, 1 6. 

Colorado  Survey  Committee  of 
State  Affairs,  creation,  172;  re- 
port recommending  introduc- 
tion budgetary  system,  172. 

Connecticut  State  Board  of  Fi- 
nance, act  creating,  129-130; 
estimates  prepared  by,  178. 

Davis,  Hon.  Westmoreland,  state- 
ment regarding  budgetary  leg- 
islation in  Virginia,  32,  33. 

Delaware,  budget  act,  41-43; 
framing  of  budget  in  hands  of 
governor,  182;  "budget  bill" 
transmitted  with  budget,  197; 
enactment  of  supplemental  ap- 
propriation bills  in,  199;  gov- 
ernor and  departmental  heads 


249 


INDEX 


heard  by  legislature  on  budget-      Harrington,  Gov.  E.  C,  of  Mary- 


ary  proposals,  206. 
Democratic    Convention,    Mary- 
land, commission  named  by,  to 
formulate  program  for  accom- 
plishment of  budgetary  reform, 

17- 

Democratic  Party,  Maryland, 
plank  inserted  in  platform 
pledging  adoption  of  budgetary 
system,  16. 

Executive  Budget,  The,  by  Gov. 
E.  C.  Harrington,  of  Mary- 
land, cited,  19. 

Fairlie,  J.  A.,  granting  of  ap- 
propriations by  legislature  in 
Illinois,  unsatisfactory,  45;  on 
work  of  Illinois  Legislative 
Reference  Bureau  in  promot- 
ing budgetary  reform,  46,  47; 
report  on  revenue  and  finance 
administration,  48. 

Financial  Administration  of  the 
Commonwealth  of  Massachu- 
setts, by  E.  H.  Maling,  cited, 
138-140. 

Florida,  joint  committee  on  budg- 
etary system,  creation,  173. 

Frazer,  G.  E.,  report  on  accounts 
of  the  state  of  Illinois,  48. 

Goodnow,  F.  J.,  chairman  of 
Commission  on  Economy  and 
Efficiency  of  Maryland,  17. 

Governor,  limited  powers  of  di- 
rection and  control  in  matters 
of  administration,  8;  should  be 
the  head  of  administrative  sys- 
tem, 12;  budget  should  be  pre- 
pared by,  13. 

Hammond,  Gov.  W.  S.,  of  Min- 
nesota, appoints  Commission 
on  Economy  and  Efficiency,  57. 


land,  comment  regarding  ap- 
propriations, 19. 

Hatton,  A.  R.,  urges  introduction 
of  budget  methods,  2. 

Heffernan,  W.  O.,  Budget  Com- 
missioner of  Ohio,  on  old  sys- 
tem of  state  financing,  72 ;  dif- 
ficulties encountered  in  prepar- 
ing first  budget,  73;  on  distri- 
bution of  appropriations  in 
Ohio,  77;  proposed  system  of 
transfer  of  appropriations,  77, 

78. 

Holcombe,  A.  N.,  on  unsatisfac- 
tory conditions  prevailing  in 
the  states  in  1916,  9-11. 

Hughes,  Gov.  C.  E.,  of  New 
York,  efforts  to  improve  finan- 
cial administration,  152. 

Illinois,  budget  act,  50-52;  fram- 
ing of  budget  in  hands  of  gov- 
ernor, 182;  short  ballot  in,  184; 
integration  of  administration 
in,  191,  192;  department  of  fi- 
nance an  overhead  service  of 
financial  administration,  192; 
governor  charged  with  formu- 
lation of  budget,  192. 

Illinois  Committee  on  Efficiency 
and  Economy,  report,  cited,  44 ; 
report  on  budgetary  reform, 
48,  49. 

Illinois  Legislative  Reference 
Bureau,  compilation  of  requests 
for  appropriations  by,  46. 

Iowa,  appropriation  act,  53; 
framing  of  budget  in  hands  of 
governor,  182. 

Iowa  Joint  Committee  on  Re- 
trenchment and  Reform,  creat- 
ed, 52;  recommendations  re- 


250 


INDEX 


garding  power  to  be  vested  in 
governor,  53. 

Johnson,  Hon.  H.  W.,  on  budg- 
et plan  of  California  State 
Board  of  Control,  83;  on  es- 
tablishment of  California  State 
Board  of  Control,  190. 

Kansas,  budget  act,  54-57;  fram- 
ing of  budget  in  hands  of  gov- 
ernor, 182. 

Legislature,  authority  of,  limited 
by  popular  election  of  admin- 
istrative officers,  8;  reform  in 
rules  of  procedure  necessary  to 
secure  budgetary  reform,  12, 

IS- 

Lodge,  Hon.  H.  G,  chairman  of 
New  Jersey  Commission  on 
Economy  and  Efficiency,  66. 

Lodge  budget  bill,  passage  of, 
introduction  to  budgetary  sys- 
tem in  New  Jersey,  66. 

Louisiana  Board  of  State  Af- 
fairs, act  creating,  132-137;  es- 
timates prepared  by,  178. 

Lowrie,  S.  G.,  on  method  em- 
ployed in  Wisconsin  in  submit- 
ting estimates,  103;  on  appro- 
priations in  Wisconsin,  104. 

Maling,  E.  H.,  description  of 
budgetary  conditions  in  Massa- 
chusetts, 138-140. 

Maryland,  constitutional  amend- 
ment, 20-24 ;  framing  of  budget 
in  hands  of  governor,  182; 
"budget  bill"  transmitted  with 
budget,  197;  enactment  of  sup- 
plemental appropriation  bills 
in,  198;  legislature,  power  to 
modify'^^dgetary  proposals, 
200;  systlKf  transfer  of  ap- 
202 ;  governor 


and  departmental  heads  heard 
by  legislature  on  budgetary 
proposals,  205. 

Maryland  Commission  on  Econ- 
omy and  Efficiency,  report  on 
movement  for  budgetary  re- 
form, 17;  draft  of  amendment 
to  constitution  passed  by  legis- 
lature, 18;  statement  on  pur- 
poses sought  to  be  accom- 
plished through  amendment, 
18,  19. 

Massachusetts,  proposed  act  for 
budgetary  reform  in,  144-146; 
movement  towards  securing  an 
integrated  administrative  sys- 
tem, 185. 

Massachusetts  Commission  on 
Economy  and  Efficiency,  crea- 
tion, 137,  140;  duties,  141;  re- 
port on  budget  procedure,  138, 
142-143. 

Massachusetts  Constitutional 
Convention  comment  on  work 
of  Illinois  Legislative  Refer- 
ence Bureau  in  promoting 
budgetary  reform,  46;  letter 
from  governor  of  Wisconsin 
relative  to  appropriations, 
1 06. 

Massachusetts  Office  of  Super- 
visor of  Administration,  cre- 
ation, 143;  preparation  of 
budget  by,  178. 

Mayor,  administrator  in  chief  in 
municipal  governments,  8. 

Michigan  Budget  Commission  of 
Inquiry,  creation,  to  formulate 
budget  system,  173. 

Miles,  R.  E.,  description  of  sys- 
tem of  accounting  and  report- 
ing in  Ohio,  75. 


251 


INDEX 


Minnesota,  budget  act,  58-60; 
framing  of  budget  in  hands  of 
governor,  182;  allotment  sys- 
tem, 205. 

Minnesota  Commission  on  Econ- 
omy and  Efficiency,  creation, 
57;  report  regarding  adoption 
of  budgetary  system,  57. 

Municipal  corporation  act,  pro- 
posed by  National  Municipal 
League  in  1899,  7- 

National  Municipal  League, 
study  of  municipal  administra- 
tion made  by,  5;  proposed  mu- 
nicipal corporation  act  of  1899, 

7- 

Nebraska,  budget  act,  62-63; 
framing  of  budget  in  hands  of 
governor,  182. 

New  Jersey,  budget  act,  67-72; 
framing  of  budget  in  hands  of 
governor,  182;  short  ballot  in, 
184;  deficiency  and  incidental 
appropriation  bills  prohibited, 
197;  system  of  transfer  of  ap- 
propriations, 202. 

New  Jersey  Commission  on  Econ- 
omy and  Efficiency,  creation, 
65;  reports  on  consolidation  of 
departments,  65. 

New  Mexico,  budget  act,  28-30; 
framing  of  budget  in  hands  of 
governor,  182;  "budget  bill" 
transmitted  with  budget,  197; 
enactment  of  supplemental  ap- 
propriation bills  in,  199;  leg- 
islature, power  to  modify  budg- 
etary proposals,  200;  gov- 
ernor and  departmental  heads 
heard  by  legislature  on  budget- 
ary proposals,  206. 

New    York,     constitution,     pro- 


posed budget  provisions,  157, 
158;  budget  and  appropriation 
act,  163-167;  legislative  com- 
mittees as  budget  framing  or- 
gan, 179;  movement  towards 
securing  an  integrated  adminis- 
trative system,  185;  "budget 
bill"  transmitted  with  budget, 
197;  heads  of  services  heard  by 
legislature  on  budgetary  pro- 
posals, 206. 

New  York  Bureau  of  Municipal 
Research,  efforts  to  establish 
budgetary  system,  154-156; 
criticisms  made  by,  on  Gov. 
Whitman's  budgetary  proposal, 

159- 

New  York  Constitutional  Con- 
vention, principles  of  a  budg- 
et adopted  by,  156,  159. 

New  York  Department  of  Effi- 
ciency and  Economy,  creation, 
153;  budget  submitted  by, 

154. 

New  York  State  Board  of  Esti- 
mates, creation,  153. 

Neylan,  J.  F.,  chairman,  Cali- 
fornia State  Board  of  Control, 
on  old  system  of  appropriating 
funds,  83. 

North  Dakota  budget  act,  121- 
124. 

North  Dakota  State  Budget 
Board,  formulation  of  budget 
by,  1 80. 

Ohio,  power  of  state  auditor  to 
prescribe  system  of  accounting 
and  reporting,  74;  budget  act, 
79-81 ;  framing  of  budget  in 
hands  of  governor,  182 ;  system 
of  transfer  of  appropriations, 
203. 


252 


INDEX 


Oregon  budget  act,  147-149;  de-         tional    Convention,    cited,    46, 


partmental  estimates  submitted 
to  legislature  with  recommen- 
dations of  compiling  authority, 
178. 

Organ  of  general  administration, 
need    for,    under    direction    of 
governor,  187-190. 
Pennsylvania      Commission      on 
Economy  and  Efficiency,  report 
on  general  financial  system  of 
state,   174. 
Public  Budgets,  by  A.  R.  Hatton, 

cited,  2. 

Quail,  Parker  &  Company,  report 
on  improving  the  administra- 
tion of  public  affairs  in  Iowa, 
52. 

Republican  Party,  Maryland, 
plank  inserted  in  platform 
pledging  adoption  of  budgetary 
system,  17. 

Revenue   and  Finance  Adminis- 
tration, by  J.  A.  Fairlie,  48. 
Sage-Maier    bill     (New    York), 

enactment  of,  161. 
Short  ballot,  purpose  of,  central- 
ization   of   administrative    au- 
thority in  governor,   13;  as  a 
means  for  securing  an  integrat- 
ed administrative  system,   184. 
South   Dakota   budget   act,    125- 

127. 

South  Dakota  State  Budget 
Board,  formulation  of  budget 
by,  1 80. 

State  Budget  Making  in  Ohio,  by 
W.  O.  Heffernan,  cited,  72,  73, 
77,  78. 

State  Budget  Systems  in  the 
United  States,  Bulletin  No.  2, 
of  Massachusetts  Constitu- 


106. 

State  Government  in  the  United 
States,  by  A.  N.  Holcombe, 
cited,  9. 

Sulzer,    Gov.    William,   of   New 
.York,  committee  appointed  by, 
to  report  on  financial  adminis- 
tration, 153. 

Supplemental  appropriation  bills, 
special  procedure  provided  for 
enactment,  198. 

Tennessee,  budget  act,  96-102; 
system  of  transfer  of  appropri- 
ations, 204. 

Tennessee  State  Budget  Commis- 
sion, preparation  of  budget 
by,  181. 

Utah,  budget  act,  25-27;  framing 
of  budget  in  hands  of  governor, 
182;  "budget  bill"  transmitted 
with  budget,  197;  enactment  of 
supplemental  appropriation  bills 
in,  199;  legislature,  power  to 
modify  budgetary  proposals, 
200. 

Vermont  budget  act,  116-120; 
"budget  bill"  transmitted  with 
budget,  197. 

Vermont  Committee  on  Budget, 
formulation  of  budget  by,  180. 

"Virement,"  steps  taken  to  in- 
troduce system  in  Ohio,  78. 

Virginia  budget  act,  35-38. 

Virginia  Commission  on  Econ- 
omy and  Efficiency,  report 
urging  budgetary  system,  31. 

Washington  budget  act,  150-151. 

Washington  State  Board  of  Fi- 
nance, preparation  of  budget 
by,  178. 

Whitman,   Gov.   C.   S.,  of  New 


253 


INDEX 

York,  efforts  to  improve  finan-  Wisconsin  State  Board  of  Public 

cial  administration,  159;  letter  Affairs,  creation  of,  105;  pow- 

to  New  York  Bureau  of  Munic-  ers  of,  106;  act  relating  to,  107- 

ipal  Research  concerning  budg-  113;  formulation  of  budget  by, 

etary  proposal,  159-160.  180,   190,   192-194. 


RETURN  TO  the  circulation  desk  of  any 
University  of  California  Library 
or  to  the 

NORTHERN  REGIONAL  LIBRARY  FACILITY 
Bldg.  400,  Richmond  Field  Station 
University  of  California 
Richmond,  CA  94804-4698 

ALL  BOOKS  MAY  BE  RECALLED  AFTER  7  DAYS 
2-month  loans  may  be  renewed  by  calling 

(510)642-6753 
1-year  loans  may  be  recharged  by  bringing  books 

to  NRLF 
Renewals  and  recharges  may  be  made  4  days 

prior  to  due  date 


DUE  AS  STAMPED  BELOW 


HOY:  t  1 1993 


GENERAL  LIBRARY  -  U.C.  BERKELEY 


6000^35512 


OF  CAUFORNIA  LIBRARY 


